Blog: The startup Industry of India

The Indian venture market is the third largest globally behind USA and China, who have a more mature startup industry. But less maturity leads to bigger opportunities, with less competition.  India has a population of close to 1,4 billion people where 730 million are internet users and there are more than 1000 incubators/accelerators. They also have the second largest English-speaking population in the world, after USA.

India has been the “back office” for many western companies since the 90s/early 2000s. From being responsible for doing all the “standard jobs”, while the front office development being done in western countries, many engineers have taken the next step by establishing their own companies. These are turning into world leading startups, scaleups and companies in a rapid pace. Initiatives like Startup India are serving as great additional initiatives, and driving more global investors and funds to the startup ecosystem.

The leading cities in the private equity/venture industry in India are Bangalore, Mumbai and Delhi, mainly due to startup clusters and strong entrepreneurial ecosystem. Other cities like Pune, Hyderabad, Ahmadabad and Kolkata (Calcutta) have shown a significant growth too. It is important to notice that except the top three cities, many of the others are often a specialist of a few industrial sectors. As an example, Hyderabad has become the main city for biotechnology in India. They established the “Genome Valley” in the early 2000s, for research, training and manufacturing for biotech. Today it is a globally respected and leading hub in this industry.

The startup/venture industry of India has become an important area for both the country’s future growth and the Indian stock market. Large global players like Accel Partners, Sequoia Capital, Matrix Partners, Helion Capital and Samsung ventures etc. is already well established in India, having financed hundreds, if not thousands of startups/scaleups already.

Some of the success of the venture/startup industry in India have also come with changes in the regulatory environment and creation of a stabile digital infrastructure. India have introduced a number of solutions which brings the markets to the startups:

• Digital India, which was a plan, set up by the Modi Government in 2015, to develop secure and stable digital infrastructure, deliver government services digitally and improve the ease of digital access
• India Stack, which is the largest open API in the world, and the goal of the project states “allow governments, businesses, startups and developers to utilize a unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery”
• Aadhaar, which is the Indian social security number solution, where all of the country’s 1,35 billion people have a unique identity number with biometric data included.  All digital solutions are connected to this ID-number and have made the possibilities for fintech-startups enormous.
• In addition, the overall improvements in the regulatory environment in India the last 6-7 years, in terms of ease of doing business, credit availability and taxation policies have given a large boost to the thriving start-up ecosystem of India.

The main focus when it comes to startup- industries is on consumer tech, software/ SaaS, Fintech and B2B commerce and tech, which account for 80 % of the investments. According to Bain & Company, venture investors in India deployed 10 billion USD in 2020.

If you are a Nordic startup/scaleup looking for pivoting an Indian market entry, it is important to keep an eye on the details when considering large opportunities available in the ever-growing and transitioning venture industry of India. One important factor for the Indian ecosystem of venture/startups is that it is evolving rapidly and market dynamics change related to how things are functioning. A lot of the structure of the companies is India-specific and you need to apply a somewhat different playbook than in other countries like China and USA. Therefore, it is important to connect with the right players who can help you getting the best starting point for exploring the Indian venture market and catalyze your success.