Indian startup scene maturing

1,000 startups added this year

 The National Association of Software and Services Companies (Nasscom) on Thursday said the Indian startup ecosystem is maturing, driven by young, diverse and inclusive entrepreneurial landscape.

President R Chandrashekhar, who released the Zinnov-Nascom report ‘Indian Start-up Ecosystem – Traversing the maturity cycle’ as part of the Nasscom Product Conclave, here said India has added over 1,000 startups this year, and registered an overall growth of 7%.

“India has emerged as the third largest startup ecosystem in the world, with a focus on domain solutions for verticals like healthcare, agriculture, and education. Nasscom will continue its drive towards catalysing deep tech startups, build category leaders and support startups to create for India,” he said.

The reports states that there has been a shift in funds from seed stage to early and growth stage startups. While seed stage funding has dropped by 53%, early and growth stage funds have gone up by 83% and 23%, respectively.

With FinTech and health-tech as the leading verticals, digital payments, lending, healthcare information management, aggregator, ecommerce, are among the mature sectors, the report said.

The report states that the total number of technology startups reached 5,200 during the year, and India is facing intense competition from countries like the UK and Israel.

B2B takes the cake

Chandrashekhar said the Indian startup has shifted focus to business to business (B2B) from business to consumer (B2C). “With 40% of the startups in the B2B segment, B2Bs share in the overall tech startup funding has touched over 30%. There is a rapid rise in B2B startups focused on health-tech, FinTech, ecommerce and aggregators,” he said.

Growth of B2B startups is being driven the rising focus on advanced technologies such as analytics, AI, IoT, AR/VR and Blockchain, among others. “26% of B2B funding ($145 million) is pouring into enterprise and SMB-focused horizontal solutions, and 90% of them are software as a service (SaaS) companies,” he said.

Bengaluru, Delhi and Mumbai retained their position as key startup hubs in India. “But there is an interesting fact that 20% of the startups emerged from Tier II and III cities,” said Chandrashekhar.  Nasscom Chairman Raman Roy said the Indian startups have the advantage of a startup landscape where accelerators, investors, academia, and angel groups are actively participating.

Mortality rate at 35% in 2017

Mortality rate in India's startup ecosystme was at 35% this year as per the Zinnov-Nascom report on ‘Indian Start-up Ecosystem – Traversing the maturity cycle’.

"This number is very low compared with global startup mortality rate of 80% to 90%. This shows Indian startup ecosystem has achieved maturity over a period of time," said R Chandrashekhar.

The total startup base went from 5,000 to 5,200 in 2017, marking a growth of 7%. Hosting the third largest startup base globally, India is competing neck-to-neck with Israel, the report said.