India's tech startup base swells by 1,200 to 7,700 in 2018
26 October 2018
India added 1,200 new technology startups in 2018 against 1,000 added last year, retaining its position as the world’s third largest start-up ecosystem, a report by Indian software alliance Nasscom said in a report.
There are now between 7,200 and 7,700 tech startups in the country, making it the third largest in the world, the report said.
The number of startups added to the Indian ecosystem doubled to 15 per cent year-on-year in 2018, with total funding also doubling to $4.2 billion. The number of new tech startups had fallen for the first time in five years in 2017 with a slowdown in funding.
Bengaluru has the third highest number of tech startups among cities globally, trailing Silicon Valley and London, a Nasscom-Zinnov report released on Thursday said.
The report said these startups have helped create more than 40,000 direct jobs in 2018 in India, taking the total employment in the segment to 1.6-1.7 lakh, with another estimated 4-5 lakh employed indirectly.
“The number of startups being added could be because of more accelerators and incubators coming up,” said Padmaja Ruparel, president at Indian Angel Network.
The number of incubators and accelerators grew 11 per cent year-on-year to over 200, the report showed. While the number of startups rose, seed-stage funding fell 21 per cent in 2018. Early-stage funding remained flat at 4 per cent, accounting to $1billion. Last year, seed-stage funding had dropped 53 per cent.
“We are seeing a continuous decline in seed-stage funding, which is a concern,” said Debjani Ghosh, president at Nasscom.
“We have to think about alternative for seed stage, where government can play a role, as in China and Japan. If you start shutting tap in seed stage, innovation will be killed.”
Late-stage funding increased 259 per cent year-on-year to $3 billion in 2018. The number of unicorns added in 2018 was also the highest ever in a year, with eight out of the total 18 unicorns formed this year alone.
Merger and acquisition (M&A) activity also picked up, with growing Indian corporate presence increasing in the pie.
There was 15 per cent year-on-year growth with over 75 deals reported in the first half of the year.
Women entrepreneurs accounted for 14 per cent, up from 10 per cent and 11 per cent in the previous two years, respectively. The startup ecosystem also added 40,000 jobs this year, with the total employee base now standing at 1.7 lakh.
Nasscom said collaboration with Israel, South Korea, Netherlands, Canada, Japan, England, France, Australia, Estonia, Germany and Russia have seen the creation of more than 400 cross border startups in 2018, and 14 international startup exchange missions.
Consumer startups like Oyo, Ola, Byju's, Zomato, Wittyfeed, Practo and GOQii have expanded overseas.
Debjani Ghosh, president, Nasscom, said the government needs to go further in opening up India as a market for startups, ensure ease of doing business and bring predictability in policy-making.
Advanced tech startups – those working on artificial intelligence (AI), analytics, augmented reality/virtual reality, blockchain and IoT – have seen a 50 per cent growth year-on-year. Of the estimated 1,200 startups in advanced tech, 27 per cent are in data analytics, 26 per cent in IoT, 24 per cent in AI, 6 per cent in AR/VR, 5 per cent in blockchain and 12 per cent in others. AI startups saw a phenomenal 120 per cent growth in funding to $150 million.