Startup Universal | India Startup Ecosystem Country Guide

Startup ecosystem summary

Key Startup Cities

Bangalore, Mumbai, Delhi/NCR

Connected Country Ecosystems

US (cross-border SaaS startups), China (investors)

Differentiators

Large population new to the internet
Affordability and accessibility of high speed mobile internet
Prevalence of basic tech talent

Challenges

Lack of capital relative to the number of tech startups in the ecosystem
Limited domestic enterprise software market means growth is limited in this typically highly scalable space and startups must target customers elsewhere from the onset
Indian entrepreneurs’ copy-paste model from the US and China means markets become too competitive too quickly

Editor's Guide

Introduction

India is one of the fastest-growing major economies in the world. The country is also ripe for disruption by savvy entrepreneurs who are willing to go the extra mile, given the following developments:

Rapidly rising disposable incomes among India’s middle class
Access to increasingly affordable smartphones–smartphone penetration increased from 13% in 2013 to 37% by the end of 2019
Availability of high-speed mobile internet at just US$0.26/GB compared to US$12.37/GB in the US and US$9.89/GB in China
A growing presence of investors that cumulatively invested USD US$14.5 billion in Indian startups in 2019

Outlook

Long perceived as a copycat market that appropriates ideas from the West, the Indian startup scene is reinventing itself by building exclusively for the next billion Indians who are joining the digital realm for the first time. The Indian startup ecosystem is taking its own shape of its own—one that is very different from the US and China—and is building new services for people who have leapfrogged several use cases. Many unique models have emerged that will redefine how Indians interact with technology over the years to come.

However, challenges do exist: a scarcity of high-quality talent and liquidity for investors prevent the ecosystem from reaching its full potential. Some interesting spaces include financial services companies offering products taking advantage of the country’s new payments infrastructure, personal and enterprise mobility solutions, next-generation e-commerce, technology-based enablement of agent/broker networks, and user-generated content creation and consumption.

Featured Tech Startups

Editor’s choice of the country’s top 10 emerging tech startups.

Bounce
Mobility
Bangalore
DailyHunt
Content
Bangalore
Meesho
Social Commerce
Bangalore
Postman
Developer Tools
Bangalore
Pratilipi
Content
Bangalore
Rapido
Mobility
Bangalore
ShareChat
Content
Bangalore
Turtlemint
Fintech
Mumbai
Unacademy
Edtech
Bangalore
Zolo
Co-living
Bangalore

Focus Industries

Editor’s choice of the industries with the most potential for technology disruption and growth.

E-commerceE-commerce startups have been in the limelight of the India startup story for the last few years. However, we are learning that traditional e-commerce platforms don’t tap into all the natural buying behaviours of a large proportion of Indians. In a "family oriented" economy like India, most consumers have traditionally made purchases along with their friends or relatives, or based on a trusted recommendation. “E-commerce 2.0” startups are tapping into this behaviour by leveraging existing platforms such as WhatsApp and Instagram to facilitate recommendations leading to transactions. Reseller models like Meesho, Shop101, and Glowroad where individuals recommend items to people on their network through social media platforms have gained impressive traction and are a win-win for all the parties involved. Resellers, typically stay at home wives, are empowered to start a business of their own, and customers can discover items that are better curated for them. Newer models like commerce on top of video-based product catalogues, live streaming by sellers, social media influencer based selling, WhatsApp based sharing for group purchases, WhatsApp based retailers etc. are now popping up and showing immense potential.

FintechTraditional financial institutions are on the cusp of disruption because of the government's push for digitization. The introduction of the United Payment Interface (UPI) by the National Payments Corporation of India in 2016 marked a fundamental shift in the way Indians interact with money. UPI facilitates real-time bank to bank transfers and has opened up a world of new possibilities by making payments a utility and reducing the costs. In 2019, UPI overtook both credit and debit cards in total transaction value, standing at US$14.6 billion in the month of May, according to the National Payment Corporation of India, the operator of UPI. More than 780 million UPI transactions took place in May 2019--an all time high. Innovative tech-enabled models continue to emerge in insurance, lending, wealth management, and neo-banking. With a GDP per capita of ~US$2000, India lags behind its BRICS counterparts by a factor of four. India’s household debt to GDP ratio is ~11% (compared to ~49% for China and ~77% in the US), insurance penetration is ~3.5% (compared to a global average of ~6.2%). Formal financial services are vastly under-penetrated in the market primarily because of the cost of distribution and operations for small ticket size products.

MobilityWith public transportation systems such as metros still in their early days of development, and private transportation being increasingly viewed as less convenient and unaffordable, some Indians have turned to the likes of Ola and Uber for their daily commutes. However, out of the 300 million commuters each day, taxis/four-wheelers account for 15 million (5%) and two-wheelers for 75 million (25%) with the remaining 200 million commutes (70%) still happening through public transportation and other modes. Even on a gigantic scale, the majority of Indians are still unserved by Ola and Uber taxis. Seizing the gap in the market, several startups offering more affordable rides have emerged including bike taxis, self-drive scooters that can be picked up and dropped off anywhere, and planned bus rides for intra-city commutes.

Talent

Editor’s perspective of the maturity level of talent in the ecosystem.

Technical Talent
Marketing Talent
Experienced Talent
International Talent

Culture and History

Editor’s commentary on how the country’s culture and history have impacted the ecosystem.

India has more than 48 million small businesses, more than twice the number of small businesses in the US. Indians have been enterprising for decades perhaps due to limited opportunities in the corporate sector until the brink of the century. Secondly, although India has a long way to go in terms of tech talent, India’s IT boom in the 1990s and 2000s created a large pool of technical talent that is evolving into product and deep technology talent, creating a fairly strong base in the country. Lastly, unlike previous governments, the Modi government has recognized the role of startups in propelling the economy forward and has launched several programs to help cultivate the ecosystem.

Interested in becoming more involved in this ecosystem and connecting with local ecosystem leaders? Let us know.

Active Investors

Country Guide

India

Guest Editor

Pratik Poddar

Startup ecosystem summary

Key Startup Cities

Connected Country Ecosystems

Differentiators

Challenges

Editor's Guide

Introduction

Outlook

Featured Tech Startups

Focus Industries

Talent

Culture and History

Community

Active Investors

Incubators & Accelerators

Startups Raising Capital

Startups Hiring

Coworking Spaces/Hubs

Events

Government Programs

Non-Government Organizations

Universities

Tech Publications

Reports & Infographics

Country Snapshot

Economy

Sources

Society

Sources

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