21‐07‐2021

The Indian Startup Ecosystem
Prof. Sabyasachi Sinha

Startup Ecosystem – Introduction
• The discipline of entrepreneurship borrowed the term “ecosystem”
from biological sciences.

• A startup ecosystem is a set of interconnected factors, including

entrepreneurs and their ventures interacting as a system, forming a
conducive environment for the creation of new ventures and
innovation.

• Startups that are associated with a strong and well‐developed

entrepreneurial ecosystem have higher chances of success vis‐à‐vis
the ones which are not.

• Top startup cities in the world are Berlin (Germany), Tel Aviv (Israel),
Helsinki (Finland), Stockholm (Sweden), Bengaluru (India), London
(U.K.), and San Francisco (U.S.A.).

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Emerging Trends in the Indian Startup Ecosystem

 Entrepreneurs from successful start‐ups are acting as angel 
investors to support new ideas – Serial entrepreneurs have 
founded more than 150 start‐ups.
 Some of the investors are turning in to entrepreneurs. More 
than 20 start‐ups founded by former investors. 
 2019 turned out to be a remarkable year, with seven 
unicorns added into the unicorn club.
 Start‐ups in 3D printing, robotics, cryptology, and block chain 
are emerging
 The number of unicorns expected to be around 100 by 2025
 Global unicorns are leveraging the Indian start‐up ecosystem 
to build innovative products.
Source: Indian Tech Start‐up Ecosystem,  Nasscom‐Zinnov report 2019

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Role of Ecosystem Components in the Life‐journey of 
Startups

• The lifecycle of startups can be divided into three stages:

• Founding stage
• Getting traction
• Growth and scaling

• The first stage needs good quality entrepreneurs and the

presence of drivers to support entrepreneurs to traverse the
journey from the idea to the commercialization of the idea.
• For the second and third stages of the startup to takeoff, the
availability of finance, market, and human resources decide
whether the chasms between the different stages of the
startups will be crossed or not.

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Activities of Indian Startup Ecosystem

• India has seen multiple startup waves since 1980s.

• The first startup wave started with information technology,
computer hardware and software focused companies seeded
in India and becoming global corporations.
• The second wave was driven by Internet boom, and several
consumer Internet companies were started. Eg. Info Edge
India, Bookmyshow
• The third wave started in 2005–06 with graduates from IITs
and IIMs having experience in companies such as Amazon and
Mckinsey starting companies such as Policybazar, InMobi, and
Quikr.

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Activities of Indian Startup Ecosystem

• The next wave started in 2011 with the increasing penetration

of smartphones, availability of high‐speed Internet, and an
increase in Internet data consumption. This period saw the
rise of e‐commerce startups. This period saw the rise of e‐
commerce startups—Flipkart and many others, and
aggregation startups such as Ola cabs and Oyo rooms.

• The latest wave is the serial entrepreneurial initiatives of the

ex‐founders of previous waves and new startups using deep
technologies.

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Technology Focus of Indian Startups

• The sectors which had seen more than 50% growth between
2014 to 2019 were Edtech, Fintech, Mobility, Automotive, and
health tech. Agritech was expected to be one of the high
growth sectors soon.

• Close to one‐fifth of the startups are leveraging deep

technologies—Artificial Intelligence and Machine learning,
IoT, Big data and Analytics, Blockchain, AR/VR, Drones,
Robotics, 3D printing, virtualization, and cybersecurity.

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Major Start‐up Hubs in India

Hub Name Share of  #of 

Startups Unicorns
Bengaluru 23‐24% 11
Delhi‐NCR 20‐21% 10
Mumbai 12‐13% 3
Others (Pune,  42‐45% 3
Hyderabad, Chennai)

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Sector‐wise Categorization of Indian Startups

• Mature sectors: Fintech, Enterprise, Retail and retail tech, and

Health tech
• Emerging sectors: Supply‐chain management and logistics,
Real estate and construction, Travel and hospitality, Edtech,
Media and entertainment
• Nascent sectors: Aerospace and defense, Industrial and
manufacturing, Agritech, Energy and Utilities, and Human
resources.

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Start‐up Hubs in India

• Startup hubs are regional ecosystems concentrated in certain

cities where different components of the startup ecosystems
are present to provide support to the new startups.

• Emerging sectors: Supply‐chain management and logistics,

Real estate and construction, Travel and hospitality, Edtech,
Media and entertainment

• Nascent sectors: Aerospace and defense, Industrial and

manufacturing, Agritech, Energy and Utilities, and Human
resources.

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Startup Hubs – Categories
• Established Startup Hubs‐ Bangalore, Delhi‐NCR, and Mumbai
account for about 55‐60% of the startups in India, with
Bangalore having 24% of the share, Delhi 20% share, and
Mumbai about 12% of the share.

• Emerging Startup Hubs‐ The cities which are coming up as

hubs of startup activity are Hyderabad, Pune, Chennai,
Ahmedabad, Jaipur, Kolkata, and Kochi. More than 150
startups are based in emerging startup hubs.

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Startup Hubs – Categories
• New Startup Hubs‐ The new cities which are making their
presence registered in the Indian startup ecosystem are
Thiruvananthapuram, Kanpur, Chandigarh, and Coimbatore.
More than 40 startups are based in new startups hubs.

• The Emerging and New Startup hubs account for 40 to 45% of

the startups and they are growth fast.

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Comparison of the top Global Startup Ecosystems

USA China India UK Israel

Count of Unicorn 203 206 24 21 7

Average time to become Unicorn (years) 6‐8 4‐6 6‐8 7‐9 5‐7
Average Valuation ($ billion) 3.2 3.8 3.2 2.4 1.3
No of Innovation clusters with minimum one  24 18 5 4 4
unicorn
No. of funded start‐ups (in 1000’s) 57 9 6.4 10 2

No of incubators and accelerators 15,00 2,400 140 50 130

Total Engineering Graduates (in Millions) 0.26 4.6 1 0.0 0.01

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Total no. of internet users (in Millions) 270 800 520 59 7

Ease of Doing Business rank, World Bank 2019  6 31 63 8 35

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Top Ten of the Indian Unicorn Club
Valuation  Unicorn 
# Company Sector Founded Location
($ billion) Year

1 Flipkart E‐Commerce 21 2007 2012 Bangalore

2 Paytm Payments 16 2010 2015 Noida
Budget 
3 Oyo Rooms 10 2013 2018 Gurgaon
Hotels
Byjus 
4 Edtech 8.2 2008 2018 Bangalore
Classes
5 Snapdeal E‐Commerce 6.5 2010 2014 Delhi
6 Ola Ride Hailing 6 2010 2015 Bangalore
Chennai/San 
7 Freshworks SaaS 3.5 2010 2018
Mateo
8 Swiggy Foodtech 3.5 2014 2018 Bangalore
9 Zomato Foodtech 3 2008 2015 Gurgaon
10 Paytm Mall E‐Commerce 3 2017 2018 Noida
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Indian Unicorn Club – Latest Entries
Valuation  Unicorn 
# Company Sector Founded Location
($ billion) Year
20 Dream11 Gaming 1.1 2008 2019 Mumbai
21 InMobi Mobile Ads 1 2007 2011 Bangalore
Insurance 
22 PolicyBazaar 1 2008 2018 Gurgaon
Tech
IT ‐ Mumbai/Princeto
23 Citius Tech 1 2005 2019
Healthcare n
Contract 
24 Icertis 1 2009 2019 Pune/Bellevue
Management

Druva  Data 
25 1 2014 2019 Pune/Sunnyvale
Software Management

Trucking 
26 Rivigo 1 2014 2019 Gurgaon
Services

27 BigBasket Groceries 1 2011 2019 Bangalore

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Startup Ecosystem Components (SEC)
• Entrepreneurs and Potential Entrepreneurs
• Academic Institutions
• Culture for Entrepreneurship
• Supporting Infrastructure: Incubators, Accelerator, and Co‐
working Space
• Availability of Funding
• Consumption Potential in Home Market
• Government Policy for Supporting Businesses

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SEC‐ Entrepreneurs and Potential Entrepreneurs
• Entrepreneurs not only create new ventures, but they also 
introduce new platforms for others to build their ventures.
• Entrepreneurship in a region is influenced by existing 
entrepreneurial activity in a region, and return of overseas 
educated and work‐experienced to a region after being exposed 
to entrepreneurial activities.
• Employees of existing technology companies, and alumni of 
Indian ivy league colleges, having exposure to global startup 
ecosystem have powered the start‐up growth in India.
• Increase in numbers of failed entrepreneurs and exit‐
entrepreneurs is building the mentor‐pool and investor‐pool in 
the Indian start‐up ecosystem.

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SEC‐ Academic Institutions

• Academic institutions play a critical role in building a productive

startup ecosystem. Top academic institutes have been the
principal source of entrepreneurial talent in India.
• Several institutes of higher education in India, introduced
Entrepreneurship as a compulsory or elective course. However,
these curriculums need to be taught with a practice‐oriented
pedagogy involving practicing entrepreneurs or mentors in the
delivery of the curriculum.
• Incubation centers and entrepreneurship cells operating in the
higher education have been useful in creating awareness about
entrepreneurship and building a favorable orientation for
entrepreneurship among the graduates.
• By 2020, 5441 Atal tinkering labs affecting six crore students were
operating under the Atal Innovation Mission of GOI.

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SEC‐ Culture for Entrepreneurship
• Traditionally encouragement for entrepreneurship has been low 
in India.
• Several factors are improving the acceptance of entrepreneurship 
as a career in Indian society
• Introduction of entrepreneurship courses in engineering and 
management institutions
• Rise of entrepreneurship cells in colleges leading to increase in events 
on entrepreneurship
• Rise of Unicorns in India and celebrity status of some startup founders
• Success of Indian entrepreneurs and venture capital managers in global 
arena
• Government initiatives—both central and federal—to make startup 
popular
• Wide publicity of “startups” in popular media

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Culture of Entrepreneurship ‐ Women 
Entrepreneurship in India

• NSSO found women manage 14 percent of 8 million businesses

in India. An Assocham India study in 2016 found that 9% of total
startup founders are women.
• Participation of women in entrepreneurship activities in a wide
range of sectors like pharma, fashion, fintech, media, retail, and
social ventures.
• Top women entrepreneurs in India are Kiran Mazumdar Shaw
(Biocon); Vandana Luthra (VLCC); Shahnaz Hussian (Shahnaz
Herbals); Meena Ganesh (Growthstory, Portea Medical); Suchi
Mukherjee (Limeroad), Ricka Kar (Zivame); Falguni Nayar
(Nykaa); Vani Kola (Kalaari Capital); Shradha Sharma (Yourstory);
Upasana Taku (Mobikwik); Sairee Chahal (Sheroes); Aditi Gupta
(Mentrupedia); and Swati Bhargava (Cashkaro)

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pp g ,
Accelerator, and Co‐working Space

• Incubators provide physical office space—or virtual incubation—
and support for the idea to product development journey, facilitate 
seed funding, mentoring, and act as a bridge for networking.
• Accelerators are support systems in entrepreneurial ecosystems 
which accelerate the journey of the startups. They provide 
infrastructure, mentorship, funding, and networking support for 
startups having proof of concept or prototype—usually a ready 
product.
• Co working Spaces are plug‐in‐plug‐out model of office spaces, 
with all functional support and amenities, provided as pay‐as‐use 
mode. One of the significant advantages of such spaces—besides 
the office infrastructure available in sachets format—is reducing 
the office infrastructure overheads for companies.

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Incubators and accelerators—Facilitating the growth of 
the startup ecosystem

 As of 2019, there are 335 active incubators and accelerators up 
from 320 in 2018
 These incubators can support approximately 5,000 start‐ups 
manually
 Numbers expected to expand 450+ by 2025.
 There has been a substantial rise in academic incubators 
 Start‐ups hubs like Bengaluru, Delhi‐NCR, and Mumbai continue 
to dominate the emergence of new incubators and accelerators.
 Emerging incubators are focussing on technologies like AI/ML, 
cloud, IoT, big data analytics.

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Incubators and accelerators—Facilitating the growth of 
the startup ecosystem

 In India, more than 50% of incubators and accelerators are 
located in tier II and tier III cities
 In India, most tech‐entrepreneurs have education background 
from IITs/IIMs
 Incubators and accelerators provide funding, mentorship, and 
networking opportunities as they have tie‐ups with industry 
leaders and government bodies.
 Corporate and independent accelerators have better networks 
and fundraising potential.
 Regional incubators face a challenge in terms of lack of mentors, 
lack of infrastructure, and limited access to findings.

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Snapshot of Some Incubators and Accelerators
Corporate Independent Academic Government
Supported
CISCO  Indian Angel  Sine (IIT  10000startups 
Launchpad Network  Mumbai) (Bengaluru)
Microsoft  incubator CIIE (IIM  T‐hub 
Scaleup Villgro Ahmedabad) (Hyderabad)
Google  GSF NRSCEL (IIM  Icreate
Launchpad Tlabs Bangalore) (Ahmedabad)
JioGenNext Venture Nursery INFUSE (IIM  iStart Nest 
Maruti Prime Venture  Ahmedabad) Incubator 
Suzuki MAIL Partners (Rajasthan)
Kerala Startup
Mission
Dalmia smart 
city accelerator

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SEC‐ Availability of Funding

• Availability of financial capital in an ecosystem is a critical 
resource for influencing startup activity.
• Major global investors such as Alibaba, Tencent, Sequoia 
Capital, and Softbank have invested in several Indian startups.
• A new fund‐of‐fund of INR 20000 crore has been announced 
by GOI; this is expected to make capital available for micro‐
VCs and VCs.
• The funding needs of startups vary depending on their nature 
and stage.

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SEC‐ Availability of Funding

• The funding needs of startups vary depending on their nature 
and stage. For technology‐based scalable, startups can be 
divided into three stages.
• Seed Stage‐ needed in the first one to two years of the startup.
• Early Stage Capital‐ arises in the second to third year, requires 
funding from venture capital firms for developing and iterating the 
business model and building traction in the business.
• Late/Growth Stage‐ arises in the fourth to fifth year, used for 
scaling up

• Funds for these stages should be available in the ecosystem

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Top‐10 Angel Investors in India in 2020
# of companies 
Angels in Portfolio Representative start‐ups
Rajan Anandan 95 Druva, Unacademy, Innovaccer, Cappilary, Dunzo
Anupam Mittal 61 Ola, Druva, Rapido, Rupeek, Whatfix
Reverse Logistics, Wow Momo, Stayzilla, Appsdaily, 
Anand Ladsaria 53 Unbxd
Kunal Bahl 49 Ola, Snapdeal, Urbanclap, Housing.com, Razorpay
Kunal Shah 48 Unacademy, razorpay, Shuttl, Rupeek, Spinny
Raman Roy 46 Wow Momo, Stayzilla, Box8, Unbxd, FabAlley
Kris Gopalkrishnan 43 Firstcry, Lenskart, cure.fit, Acko, MedGenome
Rohit Bansal 41 Ola, Snapdeal, Urbanclap, Housing.com, Razorpay
Ratan Tata 40 Ola, Snapdeal, Paytm Mall, Firstcry, Car Dekho
Vikas Kuthiawala 40 Loginext, Wow Momo, Stayzilla, Box8, peel‐works

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Top‐10 Venture Capital Investors in India in 2020
# of companies 
VCs in portfolio Representative startups
Brand Capital  450 Snapdeal, Byju's Bigbasket, Quikr, Fassos
Sequoia Capital 215 Ola, Oyo Rooms, Byju's, Grofers, Zomato

Blume Ventures 153 Ola, Zomato, Unacademy, GreyOrange, Dunzo

Accel 148 Flipkart, Ola, Swiggy, Freshworks, Cure.fit
Simpa Networks, Doubtnut, Siksha Finance, Ftcash, 
Village Capital  134 Cashfree
Axilor Ventures 114 Sigtuple, Pocket Aces, Niramai, Urban Piper, Vyapar
SIDBI Venture  Billdesk, Fourcee Infrastructure, Manthan Retail, 
Capital 102 EASF Bank, EASF Microfinance
SAIF partners 101 Paytm, Swigy, Paytm Mall, Firstcry, Rivigo
Ola, Zomato, Quikr, Mission Electric, Five Star 
Matrix Partners 93 Business Finance
Kallari Capital 80 Snapdeal, Cure.fit, Vogo, Medplus, Urban Ladder

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SEC‐ Consumption Potential in Home Market

• India is a transition point of a huge opportunity of high 
economic growth, and rise of upper‐middle and high‐income 
segment.
• This trend, supported by a rising, young working population, 
millennials, and generation Z—liberalization economy, digital‐
age born children—moving into buyers’ shoes, is going to 
create a supportive home market for upcoming entrepreneurs 
and startups.
• Several drivers will keep driving growth in Indian markets—
until at least 2030: Income Growth, Urbanization, and 
Favourable Demographics

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Government Policy for Supporting Businesses
• Easing the process of starting of business
• Dealing with construction permits
• Cross Border Trading: An electronic system—eSanchit—
introduced to simplify filings
• Resolving insolvency
• In January 2016, GOI launched Startup India Policy.
• After this, several initiatives such as launching a government 
portal “startupindia.gov.in”—to support resources, 
networking access, schemes for women and underprivileged 
entrepreneurship

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