Indian Startup Culture: Evolution and Startup Growth in India
Created on 30 Sep 2020
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Updated on 12 Sep 2022
Startups and Unicorns have been the buzz words for a couple of years now and needless to say, this decade has clearly been the decade for startups. All around the globe, we’ve seen the rise as well as the fall of various startups. Same is the story for India as well.
For every Oyo, Zomato, and Flipkart, there are countless other startups that were not able to survive and had to shut shop. However, India has been doing quite well and has really grown and built an ecosystem of startups for itself. This growth was not achieved in a day, and you can continue reading to know more about how this was achieved.
Evolution of Startups in India
Before diving into how India evolved as a hub for startups, we should first know what a startup actually is. A startup is a venture or a company that is started in order to provide solutions to certain problems that have never been answered before or to provide better solutions to the ones that are already existing.
The word startup is often related to Silicon Valley in the U.S., which saw the rise of so many great startups like Facebook, Google, etc. However, now the dynamics around the world are changing and that too very rapidly. Startups are now even related to Shanghai in China and Bangalore in India.
In fact, India ranks third in the global list of countries with the largest startup ecosystems, right after the U.S. and U.K., and it seems like there is no stopping this growth. Our country recorded additions of approximately 1300 new startups in the year 2019, with the figure for the number of tech startups reaching to around 8900-9300.
Business and trading is something that has been in the blood of Indians throughout. This is something that can be seen in our history textbooks as well. However, there are certain touchpoints in history that really helped in accelerating the startup growth.
So, if we try to chart out a rough timeline of when did this growth really start, we could probably say that a major turning point would have been in the 1980s. This was the time when Rajiv Gandhi, the then Prime Minister, introduced the Liberalisation of the Computer Industry, and it was during the 1980s that N.A.S.S.C.O.M. was also launched. This really led to a growth of the digital industry in India.
Another touchpoint to notice would be the year 2008, that is after The Great Recession. This brought many economies to their knees, and companies all over the world started laying off their employees. There was a constant fear among employees all over the world of losing their jobs.
This had a major impact on I.T. professionals in India. Many started looking for newer alternatives, and many who were fired from their jobs decided to take a step forward in the startup direction. Many famous startups in India like PolicyBazaar, Zomato, etc. were founded during this period.
After this, there has been no stopping for startups in India. It has continued to grow at a large rate. However, it is also important to know the reason why these startups have been growing at such a rapid pace in our country.
Reasons for Startup growth in India
The startup growth in India was something that was gradual in nature, and there are quite a few reasons why India became such a sustainable environment for startups to thrive in. Some of the major reasons are:
The pool of Talent - Our country has a pool of talent. India has a population that has a majority of the younger generation. This shows the amount of potential that our country has in terms of talent. There are millions of students graduating from colleges and b-schools every day. Many of these students use their knowledge and skills to begin their own ventures, and that has contributed to the startup growth in India. In the past, much of this talent was attracted to only the big companies, but now that is slowly changing.
The cost of setting up businesses is low - India is a labor-intensive country rather than being capital intensive. Also, the labour here can be hired at very cheap rates. So, compared to some other countries, the cost of setting up a business here is comparatively low. In fact, this is the reason why many multinational corporations as well, decide to set up their plants and offices in India. This is one factor that was really capitalised by the startup owners as well.
Government Boost - This past decade has seen a massive startup growth in India and one of the reasons for this could be attributed to the various schemes launched by the Government. Some of the major schemes that were introduced to boost entrepreneurship were StartUp India and StandUp India. The Government also tries to encourage ventures in new sectors or in certain rural areas by providing subsidies to them.
Increasing use of the Internet - India has the world’s second-highest population, and after the introduction of affordable telecom services like Reliance Jio, the usage of internet has really increased. It has even penetrated to the rural areas now. India has the second-largest internet user base after China, and companies and startups can really leverage on this easy access to the internet. Not only can it be used to spread the message about a new business, but it can also be used to gather new information as well. So, communication has become much easier. This is also one of the major reasons for the startup growth in India.
The advent of Technology - The evolution of startups in India has also been due to the advent of technology. This has led to businesses growing by leaps and bounds. Technology has made the various processes of business very quick, simple and efficient. There have been major developments in software and hardware systems due to which data storage and recording has become a very easy task. Now because of the trend around artificial intelligence and black-chain, many new startups are considering these options as well.
Variety of funding options available - Earlier there were only some very traditional methods available for acquiring funds for a new business model, which included borrowing from the bank or borrowing from family and friends. However, this concept has now changed. There are numerous options and opportunities available. Startup owners can approach angel investors, venture capitalists, seed funding, etc. This availability of options and easy accessibility has also contributed to the growth of the startup ecosystem in India.
The road ahead
We may think that the future for startups has now become bleak due to the current coronavirus pandemic. However, this is something that should not be worried about. We have seen in the past as well, that it was the Great Recession that made many people think outside the box.
This led to the emergence of some very great startups that have now transformed into huge companies. Whatsapp, Instagram, Zomato, Uber, etc. all were founded during the period of recession. So one good thing about this pandemic could also be that it may have given an entrepreneur just the right idea to start the next big thing.
Also, many Indians in the U.S. right now are fearing for their jobs because of the H-1B visa situation introduced by the Donald Trump Government. This is especially the case with those working in the I.T. Industry. This might encourage the talent abroad to move back to India, and this could further lead to some growth in the Indian startup industry.
With technology emerging at a very fast pace, it would further lead to the growth of more startups in the country, and with the different government initiatives, many people might be encouraged. So, for now, the road for startups seems to be heading in the right direction.
What are your thoughts, let us know in the comments below.
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