How Funding Boosts Startups To Redefine Indian Economy?

. 5 min read
How Funding Boosts Startups To Redefine Indian Economy?

How Much Do Startups Contribute To The Economy?

Startups In India

  • The Fourth Industrial Revolution aka Industry 4.0 is already out there and technologies like AI, 3-D printing, Internet of things are no longer "Next big things".
  • The Digital technology revolution is all set to disrupt every discipline, industry, and economies in every country.
  • According to a recent report by the European Patent Office, the number of patents filed related to the Fourth Industrial Revolution has witnessed a 54% increase in growth rate in the past three years.
  • It is so evident from the study that companies across sectors are jostling to keep themselves up with the pace of the digital revolution by incorporating the most modern technologies like AI, Augmented reality, ER, IOT, blockchain, etc into their business model.
  • Like every other country, India is also contemplating the possibilities of digital transformation to be ahead of this rat race.
  • An overnight transformation of business models to incorporate all emerging technologies is out of the question for companies.
  • Also, big companies would not be able to pull it off all by themself, and here comes the need for a category to fill the gaps which are Startups.

How Do Startups Help The Economy? (HISTORY)

  1. Indian startup ecosystem which houses around 80,000 Startups has the true potential to be the key driver of the digital revolution in India and can exploit the huge opportunity that lies ahead for the benefit of the country’s economy.
  2. It is very evident from the reports that India is on the right track as the Indian venture capital industry invested $10 billion ( ₹72,000 crore INR)  in 2019 alone which is 55 percent higher than the total investment in 2018.
  3. But things were not the same when the first wave of the startup revolution happened in India in the early ’90s.
  4. Most of the startups founded back then were bootstrapped because of the non-existence of a  venture funding industry.  
  5. A few of the IT/ ITES  startups founded in the early ’90s are some of the largest IT Tycoons today.
  6. The evolution of the startup ecosystem in India has been slow and steady as it has been seen disrupting every sector one after another from IT/ ITES to E-commerce, hyper delivery networks to B2B model, and deep tech.
  7. Startups have played a big role in promoting India from being the IT, services, and business process outsourcing hub of the world to be a major R&D centre for multinationals.
  8. Startup ecosystem today has come to the centre stage of India's economic activity.
  9. Everything here became so favourable for Startups founders whether it be founding a new startup, funding, influx of global investors, development of regulatory infrastructure, global mergers and acquisitions, and internationalisation to weave an entrepreneurial success story.
  10. Today India has 30 Unicorns, with four new entrants joining the club in 2020.
  11. The revolution was taken to the next level when the government joined the mission with programs like Startup India, Stand up India, Digital India and Vocal for Local.  
  12. Every initiative by the Government of India in collaboration with Startups to solve existing challenges in sectors like healthcare, rural digitisation, education, etc has been path-breaking.
  13. Also, the government has launched projects and adopted measures for startups to run their business effectively with much easier access to funds.

What Are The Challenges Faced By Startups In India?

  • Only to speak of the growth of the Startup ecosystem in India - India has become the 3rd largest startup ecosystem in the world and is expected to witness 12- 15 % consistent annual growth.
  • India has about 50,000 startups and 8,900 – 9,300 of these are technology-led startups.
  • India has the largest share of venture capital deals after the U.S. and the U.K with Delhi, Bengaluru, Ahmedabad, and Mumbai to find a place in the top 20 global cities for venture capital deals list.
  • According to the ‘India Tech Annual Factsheet - 2019’ by data analytics firm Tracxn, 2019 has witnessed an impressive 25 times growth in total funding raised by Startups in India from a tiny $550 million in 2010 to $14.5 billion in 2019.
  • The most surprising fact is that only 8 percent of Startups are funded in India which is indicating room for investments.
  • The startup revolution is moving on to the third wave by developing Next-gen technological solutions like AI, IOT, Blockchain, and Machine learning to address deep and complex challenges across sectors and to take economic activity and growth to the next level.
  • The future holds immense promise as It can benefit both sides.
  • The integration of technologies developed by Startups will help big corporates to enter new markets and also to adapt their existing products and services to meet the demands of digital consumers.
  • At the same time, it empowers start-ups to develop their brainchild with no pressure of financial constraints.
  • According to a report by Nasscom, Technology startups alone have created 60,000 direct jobs in 2019.
  • The Startup India initiative alone has created 1,87000 direct jobs since its inception and the indirect job created around it will make the number many folds higher.
  • However, the COVID 19 pandemic has made it a bit more challenging for startups to run their business and they are in dire need of raising capital.
  • The funding activities have almost come to a halt as investors both local and global are also at their hard time with the pandemic’s economic implications.
  • Getting over this situation is the need of the hour for big companies, governments, and startups alike.
  • Together they can surmount the crisis with big companies investing, partnering, and collaborating with Startups.

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FAQs

Q- Is India's environment suitable for startups?

Ans- The Indian government has introduced several policies that work in easing the stress of startups in India. Hence, India gives a lot of opportunities for startups to grow.

Q- Which City Is Best For Startup In India?

Ans- Some of the best cities that are a hub for startup businesses include-

  1. Bangalore
  2. Delhi
  3. Mumbai

Q- Who Started Startup India?

Ans- Startup India was an initiative introduced by the government of India. Announced in 2015, this force was curated to promote the startup culture of India, along with boosting the Make in India campaign.

Q- Which Is The Startup City Of India?

Ans- Bengaluru is known as the startup capital of India.