START UP ECO SYSTEM - INDIA VS INTERNATIONAL SCENARIO

Posted on January 26, 2022 by Rajiv Bajaj, One of Thousands of Entrepreneurship Coaches on Noomii.

ABSTRACT
In a recently conducted poll, the researchers agree that the only platforms suitable for start-ups are those where the entrepreneurs are capable of thinking outside the box and who can develop unique goods in order to carve out a place in a rapidly changing world. In recent years, start-ups in various areas of the globe have received more attention. The growth of new businesses in India has been quite rapid, and more assistance has been accessible in all areas. India has frequently been characterised as “the leading example of developing markets” owing to the enormous economic possibilities for entrepreneurs.
Today, Start-ups are beginning to be seen as essential engines for economic development and the creation of new employment. Investors are able to create meaningful solutions through innovation and technology, which may serve as vehicles for socioeconomic growth and change.
Even though the Indian start-up ecosystem was disrupted by the COVID-19 epidemic, it has been developing successfully. In the face of a variety of ongoing difficulties at the beginning of the pandemic, the ecosystem performed beyond expectations and saw 12 new businesses go on to achieve unicorn status. Start-up ecosystem in India, which successfully launched 12 unicorns despite a flu epidemic, has the potential to fuel medium to long-term development, according to the Economic Survey 2020-21. At the present time, India is home, according the NASSCOM Tech Start-up Report 2021, to 38 unicorns – start-ups with a value of over USD 1 billion. The United States and China respectively have 243 and 227 unicorns. This article in the place details with the Start-up Ecosystem and various opportunities. Next the paper details with the Indian scenario compared with international markets.

INTRODUCTION
In the creation of a healthy start-up ecosystem, the local economy may expand and advance, and there is a worldwide push to help developing countries stimulate their growth and development by using innovative and creative techniques. Our nation’s start-up ecosystem has shown positive results and advantages in many ways.
A new era of entrepreneurship by contributing significantly to the overall development of the country, India has had a significant impact on the global economy. Start-ups have made significant contributions. Due to the recent success made by Indian start-up companies, these companies are progressively transforming into global organisations and devising innovative commercial goods and solutions for the international market. The function of start-ups is restricted to creating jobs and training capital, but helps to decrease economic inequality. To have a higher quality of life and the development of a decent society, they’re a vital part of the whole process. According to global statistics, start-ups in the U.S. have generated more employment than big corporations or businesses.
Start-up ecosystems throughout the globe have collectively ranked India as the third-largest in the world, according to a recent study. India’s top representative in the US, Deepak Shah, expects that more than 50 firms might reach the unicorn club by 2022. As many new entrepreneurs have emerged in India, so has entrepreneurial activity increased. By 2020, India has already made it into the top 50 countries considered to be the most creative.
Three cities – Bengaluru, Mumbai, and the National Capital Region (NCR) Delhi – have modified the face of contemporary India and have been identified as one of the Global Start-up Hubs. Some experts see the start-up centres of Pune, Hyderabad, Ahmedabad, and Kolkata as emerging.
India has the most effective start-up ecosystem because it helps the nation develop more quickly. People build a start-up Ecosystem, start-ups at different stages, and many organisations interact as a system to set up new businesses from scratch, virtually or physically.
Not all organisations seek to influence all aspects of the ecosystem; some focus on particular functions, while others focus on the specific stage of their growth. The start-up ecosystem may also be defined as anything from businesses and institutions to resources like skills, time, and money.
According to a study of the 140 founders by Innoven Capital, the key reasons making India a start-up country attractive are-
• Cost of the company
• Comfort of clients / suppliers
• Domestic market dimensions
7 million university students each year; 55% of young people choose to work in start-ups over companies (as per a youth of the nation survey of 150K young Indians).

START-UP ECOSYSTEM IN INDIA
Start-up ecosystems in India have historically had severe problems, but as is shown by the successful survival and reconstructions of many start-ups, it will be a lot healthier environment in the future. As revenue, user growth, and increasing profitability, new and developing entrepreneurs’ enthusiasm for start-up ventures will continue to increase. In the event of the COVID-19 pandemic and the lockdown, quick adoption of digital must get credit for the upliftment of the Indian economy post-pandemic and lockdown.
India’s start-up environment in 2021 will be characterised by increased size, increasing revenue, and improved financial positions of businesses. Next generation businesses will get angel investors’ unending and authentic assistance.
Effective start-ups that have demonstrated their support in the past should focus on creating and developing a community and attracting real individuals into the community. In the last several years, there has been a significant vacuum in the ecosystem as a result of a shortage of accessible space for individuals to work. However, the number of incubation organisations has increased, as well as the number of co-working spaces, which has lowered the space problem. The start-up community is expected to be agiler, more innovative as well as more robust, but to continue behind the growth process even in a more disciplined and positive manner. The start-up scene in India is mostly occupied by completely new markets or sectors where there are gaps in current product lines. There are a number of rapidly-growing companies that are in the midst of transforming a whole sector including Paytm, Redbus, InMobi, Housing.com, and Zivame.
Start-ups in India have generated even more start-ups. Firms that provide growth guidance and decision-making tools to start-ups are called enablers and incubators. Their job description includes advising the government on policies that serve as market catalysts, and this helps new businesses flourish. The ecosystem stakeholders such as start-up accelerators, incubators, venture capitalists, angel investors, support organisations, technology firms, and mentors were brought together by companies like iSpirt and NASSCOM. To put it simply, their primary goal is to help new businesses get off the ground.
A decade ago, the number of technology firms in India increased from a few to dozens, and is today thousands. As of 2017, there are over 55,000 Indian start-ups with over 3,300 of them that have raised $63 billion in financing in the past five and a half years.
With the emergence of the internet in the last decade, hundreds of start-up companies have been launched, many of which seek to solve specific issues or transform whole sectors. By using data visualization in decision-making in everything from funding, growth, and policymaking in the Indian start-up ecosystem, we’re offering deep data insights to impact strategic decision-making.

START-UP ECOSYSTEM IN INDIA: OPPORTUNITIES
Today, India has 38,756 officially-recognized start-ups. 27 unicorns (start-ups with a valuation of over $1 billion) have been created there, and the country currently ranks third in the world for its total number of digital start-ups. Other than that, India’s economy, demographics, and the country’s supportive government offer enough opportunity for a prosperous start-up ecosystem.

1. Indian Economy: Prior to the introduction of the Covid-19 epidemic, the Indian economy grew steadily. The short-term expansion of economic recovery will promote increasing consumption via higher-middle income growth and the population’s high-income divisions. Therefore, the scale of the Indian market offers entrepreneurs enough chance of growing.

2. Favourable population: Another benefit is the demography of the Indian people. Approximately half of the country’s population is younger than 25. In the late 1980s and 2000s, around 700 million individuals were born with substantial aspirations and the capacity to spend. This gives them a significant portion of the population who may eventually benefit from the new products and services they provide.

3. Government supporting actively: “Start-up India” was first announced by the Indian government in 2016. The initiative proposes to establish a robust environment that encourages new companies to flourish, and also kickstarted a revolution in entrepreneurship. Finally, NPCI is leading the effort to rebuild the digital payments ecosystem, which includes Aadhaar, Jan Dhan, UPI, and India Stack. Digital connection has helped in the removal of market access obstacles and the creation of a conducive environment for entrepreneurs in India.
4. Rural area High scope: Many new companies have sought to provide residents of rural regions with an easier way of life. For instance:
• In 2014, the total client base of FIA Global reached over 34 million consumers because of the use of Artificial Intelligence (AI) in delivering financial goods and services such as remittance services and access to credit in rural regions.
• MFFine’s AI-powered health care platform offers 3,500 physicians as online services for the public to access
• The system links local pharmacies and diagnostic clinics so that pharmacists and technicians may cross-check prescriptions and then distribute over 100,000 medications.

FOREIGN START-UP ECOSYSTEMS HAVE LESSONS TO TEACH THE INDIAN START-UP ECOSYSTEM.
India has a lot to learn from start-up centres across the world like the success tales from which we can all learn.
Many city development processes have a single thread that ties them together – one that includes government as the focal point. Policy actions that are in the form of allowances such as substantial R&D tax credits, or supports to business founders such entrepreneurs’ networks and other infrastructure, may serve to soften the blow of negative market fluctuations. One thing India might learn from all of these stories is that there are many paths to success.
Such measures may be implemented in the span of 5-10 years. The success of their project depends on an agreement among stakeholders, and the willingness to execute on all levels of government. Many of these tasks may be seen as quieter work that includes the development of focus groups, networking, and letting people know of new possibilities as well as helping new business owners anticipate their future needs. For positive PR, attention should be on continuous improvements, not simply the achievement of an announcement.
A more entrepreneurial perspective may be developed via education, but this has to start at a young age. No wonder that the world’s innovation centres have educational facilities in the very middle of them. To meet the increasing demands of industry, India’s education system must be more flexible. Recently, I’ve seen first-hand how a prominent Pune elementary school teaches students about contemporary operating systems and how a floppy disc is an acceptable means of storing files. Syllabi with more up-to-date formats, plus entrepreneurial development courses and a much stronger technology transfer capacity are all needed to succeed in this field
Start-ups in India often neglect the quality of their products. At this stage in Silicon Valley, one thing holds true for everyone: getting the product right and improving the customer experience are the company’s number one priorities. In India, programming is considered more important than making the product usable. It implies Western markets are closed to Indian companies who provide comparable goods and service capabilities at lower costs.
The government may help foster India’s start-up scene by engaging with it via procedure, rather than attention-seeking methods. To take one example, a way to provide entrepreneurs a head start in public projects is to locate areas in need of development and brainstorm potential start
up ideas there. We would also look for urban issues where municipalities might use creative ideas from start-ups to assist with their initiatives.
Due to this, the majority of Indian companies lack worldwide visibility. These governments including governments from Israel, the UK, and the United States often sponsor entrepreneurship delegations, include businesses in expos, and provide foreign-exclusive speaking slots only to senior business figures. This occurs in certain businesses, although business chambers in India have always shied away from this strategy. It does not need much effort to do any of these. Every major step forward for India is done with government determination at the core.

COMPARING INDIA AND CHINA’S TWO LARGEST START-UP ECOSYSTEMS
The world’s fifth-largest economy, with a GDP of $2.94 trillion, is India, while the world’s fourth-largest economy, with a GDP of $14.14 trillion, is China. Both nations have seen tremendous development since China implemented the Open-Door Policy in 1991, which opened the door to international companies and liberalised India’s economy. While the United States now has the world’s biggest economy, China and India are projected to surpass it by 2030 to become the world’s two largest economies.
During their early years, they were mainly controlled by steadily expanding conventional companies. However, when the internet linked the whole globe and cell phones increased internet accessibility to virtually everyone on the planet, everything changed. This unusual mix created plenty of new possibilities for companies and a far more rapid path to development
Businesses now have the potential to expand at an unprecedented rate by contacting consumers worldwide. That is just what the new generation of entrepreneurs accomplished, and these quickly expanding companies, dubbed start-ups, are now changing the globe and both of these economies.
India’s need on Chinese goods is even more important now due to increasing conflicts between the two nations, border issues, and anti-China sentiment in India (self-reliant).
According to estimates, about 10,000 new companies are founded daily in China, making China home to the world’s biggest start-up ecosystem. More than the total population of Nepal, there are reportedly around 30 million Chinese companies. A nation full with entrepreneurs may be a wonderful thing to see. In terms of the number of companies established each day, China is one of the world’s biggest start-up ecosystems.
In regards to India, it is believed that there are about 80,000 companies, and of them, just 30 are unicorns. This is a very big deal for a nation that ended 2015 with only 19,000 companies and eight unicorns. On the yet another hand, China has about 7 times as many unicorns as India, but on the other, it has over 30 million companies. Meaning that, whereas one in 2,667 Indian companies turn become unicorns, on the other hand, just one in roughly 1,45,000 Chinese start-ups achieve the same status. Start-up ecosystems in India are still in their infancy, yet the country ranks third in the world.

INDIAN GOVERNMENT POLICIES
The Animal Husbandry and Dairying Department, along with Start-up India, has sponsored a grand competition to reward companies in 5 categories of 10 lakhs INR each.
In an effort to help the country’s current SMEs in development, the Small Industries Development Bank of India has established a project to supply them with financing.
Across the nation, over 26 states have enacted Start-up policies.
A list of projects implemented by the Indian government to encourage and grow the nation’s start-up community:
• Mudra Bank
• Atal Innovation Mission
• Software Technology Park Scheme
• Modified Special Incentive Package Scheme
• Venture Capital Assistance Scheme
• Ebiz Portal
• Aspire
• Ministry of Skills Development and Entrepreneurship
Exceptions for Start-ups in India are as follows:
• Exemptions from six labour laws and three environmental laws for a period of three years.
• Tax exemptions for the next three years provided they get a certification from the Inter- Ministerial Board.
• Faster exit norms to encourage innovators through provisions for winding up or liquidation within 90 days of filling an application.
• Free legal support in filling intellectual property rights and fast-tracking of their patent applications.
• An 80% reduction in the cost of filling patents.

START-UP ECOSYSTEM: CHALLENGES
1. Case of regional imbalance: India has a very varied culture, language, ethnicity and religion across a wide variety of countries. Due to this, start-ups only have an incomplete grasp of them. It’s impossible to make a clear distinction between advantages and disadvantages since these terms are intrinsically connected to particular locations.

2. The Divide: The consumers of the mass market tend to be drawn from communities with low socioeconomic status, given that about 70% of the Indian population resides in rural regions. Due of this, entrepreneurs typically avoid developing a pan-India strategy.

3. Funding issues: Raising money may be difficult, since company founders will have to come up with large sums of working capital. Many companies are crowdfunded, in particular in the early phases, i.e., financed by personal savings from founders or utilising funds from friends and family.

4. Difficulty: Not many job-seekers like working in start-ups owing to the inherent risk that they will fail. Additionally, a large number of job candidates are not competent enough. Many start-ups have discovered that there is a huge gap between the education students get in universities and the expertise employers need, particularly in fast-changing industries where new technologies & opportunities emerge quickly.

5. Complex Environment: New regulations established by the Indian government seek to lower the costs of starting a company. However, existing regulatory constraints are often viewed as time-consuming, wasteful, and ever-changing.

START-UP ECOSYSTEM INDIA: FUTURE
With regard to India, after a pandemic, priorities will likely be directed towards improving the digital infrastructure in many areas, including healthcare and education, and also creating jobs in manufacturing and infrastructure. In order for the Indian start-up ecosystem to be able to meet the important national objectives, the start-ups in these key areas must be able to provide these solutions. India now has a great number of angel investors, venture capitalists (VCs), private equity funds (PEs), and Indian family offices with which to draw on money. Investing money in start-ups is particularly challenging since there are few reputable and scalable businesses in which to put the money. The financing seems to be less of a restriction, and this provides Indian entrepreneurs with an appealing chance to be both inventive and creative in their concepts. Entrepreneurs that kept their start-up alive in 2020 may count on the new-found trust of investors once again.
According to the Indian venture capital (VC) community, transaction flow in India will remain healthy as global investors remain interested in investing in the Indian start-up ecosystem in 2021. Different Indian investors have said in various conversations that they want to invest in industries including e-commerce, ed-tech, fintech, and SaaS. Meanwhile, they have also expressed an increased level of interest in space tech and aggrotech. Industry consolidation is expected in India’s tech ecosystem in 2021. As well as an increase in mergers and acquisitions and an increase in IPOs, consolidation is expected in India’s tech ecosystem in 2021. CAGR growth projections of deep-tech and new start-up hubs are anticipated to increase at a 40–45% clip over the next few years. Based on previous reports, India has a chance to have over 50 unicorns by 2021-22.

CONCLUSION
The Indian market provides numerous possibilities for entrepreneurs and in turn, start-ups hold huge aspirations to encourage development and generate jobs. Over the past two decades, India has seen a tremendous growth in the start-up environment. It follows that the level of support has risen in numerous areas. Though many predict that the ecosystem will remain immature, many do believe that the current state of the environment will improve.
Nevertheless, start-ups in India still confront a number of obstacles. In order to overcome these challenges, everyone must play a part. When the culture around us changes, we have the ability to allow individuals to take chances and potentially provide meaningful answers.