India could be the next tech startup revolution, says Elixirr
The interplay of socio-economic development, digital advancement and increased involvement from the government has the potential to drive India beyond Silicon Valley as a startup ecosystem, according to consultants from “challenger consultancy” Elixirr. More than 5,000 startups have emerged in the country in the last two years alone.
Driven by innovative and increasingly affordable technology, the startup boom has hit many countries in recent years, but few more so than India. The rapid increase in the number of businesses emerging over the last two years has positioned India as the third largest startup hub in the world.
India’s market is vibrant at the moment, and some of the biggest firms across the world have recognised this. In 2016, for instance, French consulting firm Capgemini declared its intentions to partner with a large number of innovative new firms through its Mumbai-based Applied Innovation exchange.
From the other end of the globe, Japanese consulting firm Dream Incubator initiated a venture fund in India worth 5 billion yen earlier this year, and at the top end of the international spectrum, Accenture and Microsoft announced a partnership in January to support B2B startups in India.
Consultancies have rushed in, and the venture capitalists (VCs) have not been far behind. “There is serious capital being deployed across the startup landscape to fuel this growth: $13.7 billion was invested in 2017 alone across 820 deals involving over 200 VCs,” according to fast growing consulting firm Elixirr.
According to the firm, two of the most prominent VC funds in the world – Sequoia and Lightspeed – have been busy building a foundation in the effervescent market. Sequoia has raised more than $800 million in the country so far, which includes money raised for Zomato – a food search and delivery app that has gained massive popularity across the country. To feed its new investments into startups such as Itz Cash and Craftsvilla, Lightspeed has opened a second office in India, thereby making its intentions clear for the market.
Driving forces
While several other emerging markets across the world are facing similar waves of investment, Elixirr’s consultants describe India’s startup as unique, for three main reasons.
The first is the sheer magnitude of the online market. The number of people in India with internet access has increased by over 100 million over the last two years. According to a report from the Boston Consulting Group last year, this number will reach as high as 850 million by 2025, which represents unlimited possibilities for businesses in the online space. Among the India-bound firms mentioned above, most established their funds with a specific focus on digital-based innovation.
Increased digitalisation, in turn, is a product of the socio-economic scenario in the country. An overall increase in economic prosperity, and the consequent gravitation towards key urban centres, is creating a large middle class that can afford to further integrate technology into their lives. Even in rural areas, Reliance Jio and its extremely low-cost data plans have increased accessibility, while development of agri-tech is ensuring that digital access can be put to productive use in these areas.
The third factor that represents promise for India is expanding support from the government. ‘Make in India’ and ‘Digital India’ are large-scale government schemes that are designed to shift India’s status from a provider of services to the global economy, to a self-sufficient economy that leverages innovation to solve its own economic problems. The objectives of ‘Digital India’ include creating universal connectivity, and the subsequent transition to an entirely digital economy.
“For now, much of the world’s focus will remain on the seemingly endless stream of headline-grabbing innovations and billion-dollar flotations emanating from Silicon Valley. But India is quietly making ground, and it will not remain quiet much longer,” said the experts at Elixirr.
