The start-up ecosystem in India has been rapidly growing since 2010. In the last three years, the rate of growth has increased. While a broad-based secular growth, this growth has been driven by a number of factors including availability of talent, entrepreneurial energy, government support, increasing access to funding, a growing role model of successful talented entrepreneurs and a move up the value chain in technology. One of the best motivational factors for the start-up ecosystem is the emergence of unicorns; while the actual number of unicorns varies the number is now around 105. (Dec 2022).

Many factors have supported this growth. There has been a significant increase in investments in the country’s start-up incubators and accelerators to support early-stage companies. In particular, the growth in start-up incubators focussing on enabling student and university level entrepreneurship has been phenomenal. Start-up incubators such as those located in PSG Coimbatore, VIT Vellore, SRM Chennai and many others have done an excellent job in stimulating entrepreneurship. Another major factor in the growth of the Indian start-up ecosystem has been the increasing availability of funding for entrepreneurs. This has been driven in part by the rise of venture capital firms and angel investors in the country, as well as the growing popularity of crowdfunding platforms. Indian start-ups raised around $40 Billion in funding in 2021 and the number is likely to be around $42 Billion in 2022 (Estimated). The Indian government’s Make in India initiative has been working to increase the country’s competitiveness in the global market. Another important growth area is in real science and deep science start-ups. While earlier innovation was a bit more concentrated on e-commerce and software, the growth in 2022 has been broad based in many industries including healthcare delivery and pharma, education, agriculture and other sectors with many moving up the science value chain.

As per Invest India, between 2015-2022 there has been a 15X growth in funding, 9X growth in the number of investors and a 7X growth in the number of start-up incubators and accelerators. With all this multi-dimensional growth, India is now classified as the world’s third largest start-up ecosystem after US and China.

Introduction of key categories of start-ups:
While the start-up ecosystem in India is broad and evolved, these start-ups can are spread across sectors and can be categorized into a few categories.

The first category of start-ups in India are e-commerce start-ups. These are companies that use the internet and technology to create and sell products and services online. Examples of e-commerce start-ups include Flipkart, Myntra and Snapdeal. These companies have revolutionized the way people shop, as they can now purchase items from the comfort of their homes with just a few clicks. This was the first category of start-ups in India that achieved scale and many of the first unicorns were from this category. This is also the most evolved category of start-ups, that many of them are now large corporates (Example Flipkart being acquired by Walmart).

The second category of start-ups in India are FinTech start-ups. These start-ups use technology to create innovative financial solutions, such as online banking, digital payments, and insurance services. Examples of FinTech start-ups include Paytm, and PhonePe. These companies are making it easier for people to manage their finances and access financial services. The entire FinTech category in India has hugely benefited from the Unified Payments Interface (UPI). UPI is a payment system that enables users to securely transfer money through their mobile phones. This system enables users to transfer money from one bank account to another without the need for a physical card or cash. UPI is transforming the way people make payments in India, making it easier and faster for people to send and receive money. Cashless payments are so common in India in 2023, that you can find it even for a Rs.5 transaction (5 Cents US).

The third category of start-ups in India are health tech start-ups. These start-ups use technology to develop products and services that make healthcare more accessible and affordable. Examples of health tech start-ups include Practo, 1mg, 5C Network and Portea Medical. These companies are making it easier for people to access quality healthcare services and products.

The fourth category of start-ups in India are SaaS start-ups. These start-ups use software-as-a-service (SaaS) technology to provide solutions to businesses. Examples of SaaS start-ups include Freshdesk, Zoho, SmartHub.ai and Druva. These companies are helping businesses streamline their operations and improve their customer service. These tend to be global in nature and address a global software need- such as Customer Relationship maintenance.

Core Elements of Indian Start-ups:
The core elements of Indian start-ups are innovation, scalability, sustainability. These three core elements are important for any start-up to succeed in the long term. Innovation is the key to success in the start-up world. Indian start-ups need to come up with innovative solutions to disruptive problems in order to stand out in the market. They need to develop new products or services that customers need and want. This requires creativity and out-of-the-box thinking. In the tech sector Indian start-ups are particularly good at latching onto a new latest tech trend and building innovative products around it. As example, there are more than 2000 AI Start-ups in India by end of Dec 2022.

Scalability is another important factor. Indian start-ups need to have the ability to scale their business to meet the growing demand of customers. This means that they need to be able to quickly increase their production and distribution capabilities in order to meet the rising demand. Being home to a large consumer base of 300 Million plus middle class people and a 1.2 Billion population, Indian start-ups have some inherent home court scale advantages.

Finally, sustainability is essential for any start-up to succeed. Indian start-ups need to be able to generate enough revenue to cover their costs and keep the business running. This means that they need to have a strong business model that is profitable and sustainable in the long term.

Author：Siva Ramamoorthy　Mentor, Derbi Foundation

Siva is a successful Entrepreneur, a Corporate Leader, a Global Start-up Mentor, an active teacher of Entrepreneurship, such as a Mentor Stanford Ignite and at the Metropolia University of Applied Sciences, Finland. He holds a MS in Computer Science from the University of Kentucky, also a MBA from the Kellogg School of Management, Northwestern University, USA.