The great Indian start-up growth story – Part 1

Even as businesses struggled due to the pandemic-fuelled disruptions worldwide, India’s start-up ecosystem remained robust during this period, with several of these start-ups even attaining Unicorn status as investors infused funds into these ventures. The massive transition to digital brought about by the pandemic has further helped in fortifying the start-up ecosystem. Today, India has emerged as the third largest start-up ecosystem in the world after the US and China and the pace of growth is not showing any signs of slowing down.

Over the last year, India has added three Unicorns every month, taking the total count to 51, ahead of the UK (32) and Germany (18). This figure is expected to touch 100 by 2025. A privately held start-up company valued at over $1 billion is called a Unicorn. Apart from the huge venture capitalists, the institutional investors and the pension funds are also investing in many new online businesses. In the period of January-March 2021, investors have infused around $4.4 billion into Indian start-ups, which is 26% more than the investments made last year in the same quarter. The top gainers in the funding deals are the Fintech and Financial Services companies (123), followed by Retail and E-commerce companies (99) and EdTech companies (84). This shows that even after the turbulence due to the pandemic in India, the start-ups have found a way to stay aloft.

Changing Face of Indian Start-ups:

India’s start-up ecosystem began almost two decades back and over the period has been keeping pace with the world. Some of the start-ups started as early as in the year 2000 and has today blossomed into great unicorn companies. Since the support and encouragement was not enough the growth was not rapid. However, with the government stepped in to boost the start-up revolution by setting up the Start Up India foundation. The vision here is to build a strong and robust ecosystem in India, which will help in nurturing innovation and providing opportunities to budding entrepreneurs. The initiative has been planned both at the Centre and State levels to support start-ups across the country. Among the cities that are home to these firms, India’s Silicon Valley Bengaluru continues to lead with nine of this year’s Unicorns originating from there. Mumbai follows close behind with seven Unicorns, followed by Gurgaon with three, Chennai, Delhi, Noida, and Pune with two each, and Thane with one Unicorn. The primary focus of most start-ups is in the technology space, but there are non-tech and micro entrepreneurs who have also come with some new and innovative ideas and business solutions.

Communicating The Right Way:

Formulating the right marketing and communicating strategy is very pivotal for every start-up. While they do not enjoy a big budget to splash, but at the same, they need to promote and create awareness for their product or service. The need of the hour for most start-ups is to have effective, but inexpensive campaigns that will create a good impact in the market place. They will look at out-of-the-box ideas and marketing methods like guerrilla marketing activities to reach their target audience for a minimum cost with maximum impact and returns. PR is another tool which will play a key role in creating the category and demystifying myths and stating the benefits in the simplest manner. Brands like Flipkart, MakeMyTrip, Meesho, BYJU’S, Dunzo, Zomato and the likes of Swiggy judiciously used both mass media, social media and PR to engage with their audience.

Since all start-ups are born on the back of a powerful idea, the founders and owners will be so passionate to see their idea come through flying colours. So, while communicating their value proposition they have to tell their story with lot of passion and the story should be clear, concise and consistent, with credible messages with the right value proposition that will help and grow the brandand build their reputation both online and offline.

India - A Land of Unicorns:

A Unicorn is any private company whose valuation is $1 billion or more. These 65 companies also include former Unicorns, firms that have gone public or have been acquired. This year’s Unicorns include gaming platform Mobile Premier League, groceries platform Grofers, cryptocurrency exchange CoinDCX and fintech platform BharatPe. In fact, 2021 has turned out to be a year to celebrate as many start-ups turned Unicorns.

The number of Unicorns that India has been producing has been increasing for the years. Case in point, from 2011 to 2014, the country produced only one Unicorn per year. But this figure jumped to four in 2015, further growing to eight in 2018, nine in 2019, 10 in 2020 and a whopping 28 in 2021. This trend, more than anything else, is indicative of the maturing of the start-up ecosystem in India and the investors’ faith in the country’s start-ups as they see a huge potential which fetch high returns with the Indian start-ups.

Technology Companies Take the Lead:

Fintech has the highest number of Unicorns, but among the various sectors unicorns among sectors – five this year, thus far. It is closely followed by e-Commerce, SaaS (Software as a Service), marketplace (manufacturing services, jobs, used cars and handyman services) segments with four unicorns each, and edtech, NBFC (Non-Banking Financial Companies), B2B (business to business) sectors with two unicorns each. The other Unicorns in 2021’s list belong to segments such as gaming, cryptocurrency, logistics services, social media and conversational messaging. The buoyancy will last as we can expect more Unicorns to hit the ring in the next one year and at the same time there are more start-ups being launched. Some of these Unicorns also came out with their IPOs.

Tomorrow: Part 2 of the report will present the views of some industry experts and start-up founders on what makes the current market conditions so conducive for a buoyant start-up ecosystem.