As per the NASSCOM Report 2015, India is the most exciting Start-up nation emerging globally and here’s why.
No. 3 ranking in the Global Start-up Ecosystem
The US is the largest for technology driven Start-ups with 47,000-48,000 companies, Great Britain has 4,500-5,000 companies, India ranks 3rd with 4,200-4,400 companies, Israel has 3,900-4,100 and China 3,300-3,500 companies. China, too, has ambitious plans to promote Start-ups and should be giving strong competition to companies from other nations. Between 2013 and 2015, Start-ups in India grew by 70%, and between 2015 and 2020, the growth rate is expected to be 75%.
9 Indian Start-ups valued at over $1 billion
Between 2014 and 2015, valuations of several Indian Start-ups have skyrocketed, reflecting the confidence investors are placing on the Start-up ecosystem in India.
125% increase in funding over 2014
Between 2010 and 2015, Start-ups in India received $9 billion. Whereas, in 2015 alone, the total investment touched $9 billion. 2016 is expected to see higher levels of investment.
123% increase over 2014 in active investors
In 2014, there were 220 active investors. The number has risen by 123% to over 490. This number is further expected to rise in 2016. The average funding level in 2015 was $95 million per week.
$2.5 – $2.7 million the average valuation of Start-ups
Average valuation increase is a great indicator of how overall Start-ups are performing and the level of confidence that investors place on these companies.
40% increase in number of Start-up Incubators and Accelerators
In 2014 there were 80 Incubators, the number has increased to 110 in 2015. With the government now supporting the establishment of more incubators and accelerators, the number will substantially increase in 2016-17. It is interesting to note that over 50% of these are located outside the traditional cities of Delhi, Mumbai and Bangalore. Bangalore is ranked 15th in the Global Ranking for Start-up cities.
80,000 – 85,000 directly employed by Start-ups
This figure is expected to increase to over 2,50,000 within the next few years. The indirect potential for employment is even higher.
8 out of 10 VCs & PEs operating in India are foreign companies
This reflects strong confidence in the Indian entrepreneurship and technology by foreign firms, and in 2016, more domestic firms are expected to join the list of companies looking to invest in the next big idea coming out of India.
28 years is the average age of Start-up entrepreneurs
72% of Start-up entrepreneurs are below 35 years of age making Indians amongst the youngest set of entrepreneurs in the world. The break-up is – 31% are within 31-35 years, 26% within 26-30 years, 15% within 20-25 years and 15% within 36-40 years. Of these, 35% are Engineering graduates, 26% hold MBA degrees, 10% are post-graduates, and 4% are Engineering post-graduates. 91% are male entrepreneurs and 9% female.
Prime Minister Modi launches Start-up India
On 16 January 2016, PM Modi launched the Start-up India initiative which was attended by leading international and domestic VCs and PEs, CEOs of leading Start-ups, Industry Captains, heads of major industry and trade bodies, senior bureaucrats, and most importantly, budding entrepreneurs.
The 12 big announcements by PM Narendra Modi pertaining to Startup India Action Plan:
- Rs 10,000 crore Fund of Funds has been set up to promote Start-up ecosystem in India.
- Credit Guarantee Fund for Start-ups.
- No Income Tax for the first 3 years. Exemption also valid for capital gains invested in SEBI registered venture funds.
- 80% rebate on patent registration fee.
- Self-Certification regime with no labour inspections for the first 3 years.
- Easy, Single-day registration through mobile app and portal, likely to be launched on April 1.
- Easy norms of public procurement for Start-ups.
- The Atal Innovation Mission for establishing sector specific incubators and 500 ‘Tinkering Labs’ to promote entrepreneurship, provide pre-incubation training and a seed fund for high-growth startups. Additionally, three innovation awards to be given per state and union territory, three National Awards and a Grand Innovation Challenge Award for detecting ultra-low cost solutions for India.
- A Startup India Hub for collaboration among multiple startup ecosystem players, helping them obtain financing and organizing mentorship programmes for encouraging knowledge exchange.
- Faster exits for startups.
- Innovation focused programmes for students aimed to source 10 lakh innovations from five lakh schools, out of which the best 100 would be shortlisted and showcased at an Annual Festival of Innovations, scheduled to take place at the Rashtrapati Bhawan.
- An annual incubator grand challenge wherein the government would identify and select ten incubators (evaluated on pre-defined Key Performance Indicators (KPIs)) as having the potential to become world class. A cash prize of Rs.10 crore would be awarded to each incubator to assist them in ramping up their infrastructure.
Who said what?
PM Modi spoke of the need for youth to become job creators rather than job seekers.
Finance Minister Arun Jaitley in his address, highlighted the need for government to act as facilitator rather than regulator, if the Start-up India initiative were to be a success. He re-affirmed the government’s commitment to minimize interference from government officials and announced a ‘Self Certification’ compliance system pertaining to 9 environment and labour laws, along with no labour inspections for the first 3 years, all of which are aimed towards minimal government interaction.
To further support the initiative, the government has offered various incentives by way of income tax exemption for the first 3 years along with exemption from Capital Gains tax.
Masayoshi Son, the Japanese billionaire investor and co-founder of SoftBank, re-iterated his commitment to the India Start-up story. He said that his firm had already invested $2 billion in Start-ups in India and he was open to making further investments going forward. He spoke of India’s strengths in having a young English speaking population that was highly educated and skilled, low cost of labour, and wide adoption of technology, as some of the reasons why India is a preferred destination for investors.
Travis Kalanick, founder of the most valued Start-up, Uber, spoke of how those entrepreneurs who create magic see the future long before anyone else and gave Steve Jobs’ example of how he visualized the product and opportunity far ahead of everyone else.
Co-founder of the Pentium Chip, Vinod Dham, highlighted the need for the government to have friendly and supportive policies towards Start-ups.
Kanwal Rekhi of Inventus Capital highlighted tax sops given to investment from Mauritius, but not to those from the U.S. He said that several American firms were forced to invest through Mauritius when they would prefer direct investments.
Venktesh Shukla, President TIE Silicon Valley Association, spoke of the need for the government to make entry and exit easy for Start-ups.