Overview of Indian startup ecosystem
Transcript of Overview of Indian startup ecosystem
Overview of Indian startup ecosystem
Confidential and proprietary © Praxian Global Pvt. Ltd.
September 2020
Indian startups raised $63 billion during 2016-20; making India the World’s 3rd largest tech startup hub
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• India has a prosperous and vibrant start-up ecosystem which is booming
‒ World’s 3rd largest tech start up hub with ~US$ 63B invested during 2016-20 in startups
‒ Total 50K+ startups in India with 9K+ created since 2014
‒ SaaS / AI vertical has dominated early stage funding deals (<US$ 10M) with ~25% investments going into SaaS / AI verticals like Fintech, IoT, logistics tech among others
‒ 27 domestic unicorns since 2014
• Significant startup activity has been created owing to:
‒ Availability of technical talent pool
‒ Changing perception around entrepreneurship
‒ Cross-pollination of learnings from global tech companies
‒ Increased government support through infra and funding, and
‒ Large amount of foreign capital flowing into India motivating domestic capital pools to participate as well
• Given the booming tech start-up eco-system in India, there is a huge demand for services across the lifecycle of tech-
enabled products like a) product designing tools, b) development platforms, c) product testing tools, d) solution hosting
and infrastructure, and e) customer support tools
Executive summary
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India: Leading tech ecosystem in the world
Source(s): Startupblink, NASSCOM, Government portals, Inc42, Tracxn, Praxis analysis
~$63 B
Funding poured into
Indian startups during
2016 - H1 2020
3rd
Largest ecosystem in
number of technology
startups, 2020
27
Number of Unicorns till
2019, 8 additions in
2020 so far
3
Cities among top 10
startup cities in Asia –
Pacific, 2020
~$20 B
Startup funding in 2019
across 1,854 deals
Robust
ecosystem
>US$ 60BCumulative
valuation of start-
ups founded in
2014-19
1000+ Active institutional
investors as of
2019
335+ Accelerators and
incubators as of
2019
44%Startup unicorns
have overseas
market
50,000+ Startups as of
2018;
12-15% growth;
9000+ in 2014-19
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India’s startup ecosystem is concentrated in three major cities; SaaS / AI accounts for ~25% of the startup ecosystem followed by Healthcare & Life Sciences (~14%)
Note(s): Others Include Media and Entertainment, Advertising and Marketing, Energy and Utilities, Gaming, Legal tech, Aerospace and Defense etc. Analysis of start-ups founded between 2014-19Source(s): Indian Tech Start-up Ecosystem report, Praxis analysis
23-24%
20-21%
12-13%
42-45%
Bangalore
Delhi / NCR
Mumbai
Others
Bangalore, Delhi-NCR, and Mumbai are home to 55-58%
start-ups
25%
14%
10%6%
5%
4%
4%
4%
4%
3%
3%
3%
2%
13%
Sector-wise split of startups (2014-2019)
SaaS / AI
Healthcare & Life Sciences
BFSI
Edtech
Retail tech
Travel and Hospitality
Transportation & logistics
Real Estate
Automotive
Industrial & Manufacturing
Foodtech
Mobility
Agritech
Others
SaaS / AI accounts for ~25% of the startup ecosystem of
India whereas other
Total: ~9K startups
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~US$ 34B invested in Indian ecosystem during 2019 and ~US$ 17B in 2020 (till May); Tech enabled players driving investor’s interest
Note(s): Construction and manufacturing sectors are excluded from the analysisSource(s): Praxis investment database, Praxis analysis
2019 and H1 2020 have seen huge investments in
telecomTech enabled startups have dominated the funding landscape
2.8
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2016 2017 2018 2019 2020
Investments in India by sector2016- 2020 (Jan-May), US$ B
BFSI Online Services (MP/LP/AG) Energy Telecom SaaS/AI Healthcare & Life Sciences Online Services (Consumer app / platform) Transportation & logistics FMCG IT services Others
Company Vertical
Funding in
2019 – 20,
(US$ M)
Cumulative
funding,
(US$ B)
Key investors
Jio Platforms Telecom 9,871 15.2 Vista Equity Partners, ADIA,
Silver Lake, TPG Capital
Byju’s Classes Education 1,050 10.8 Tiger Global
CitiusTech HealthTech 880 1 Baring Asia
Oyo Rooms Hotel aggregator 807 3.2 SoftBank, RA Hospitality
UdaanE-commerce
(B2B)616 1.6
GGV Capital, Altimeter
Capital, Tencent
Ola Taxi booking 534 3.2Hyundai Motor Company, Kia
Motors
Delhivery Logistics 528 0.8 CPPIB
CureFit Wellness 351 0.4 Temasek, Accel, Epiq Capital
Postman SaaS/AI 200 0.2 Insight Partners
Lenskart.comE-Commerce
(Eyewear)330 0.5 SoftBank
Bounce Scooter rentals 329 0.4 Accel, Sequoia Capital
Ola Electric MobilityMobility
(Electric)324 0.3
Matrix Partners India, Tiger
Global, Ratan Tata
ZomatoRestaurant
aggregator310 1.1 Baillie Gifford
FirstCryE-commerce
(Baby products)300 3.2 SoftBank
CardekhoClassifieds
(Cars)299 0.5
Sequoia Capital, Hillhouse
Capital Group, CapitalG
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Key factors driving startup ecosystem in India
Source(s): Secondary research, Praxis analysis
Large domestic market
Increased political will
and government support
Demand from global
players
Ever increasing talent
pool
• Government of India is advocating
entrepreneurial mindset by introducing
regimes:
– ‘Make in India’ -> aims to make
India a global manufacturing hub
– ‘Stand Up India’ -> aims at
promoting entrepreneurship and
job creation
– ‘Startup India’ -> aims at
promoting bank financing for
startups
• Enablers and incubators are also
providing startups with growth advice
and decision-making tools• Increase in # universities, followed by increasing
enrolment rate has led to a rise the talent pool with
~10% of the population being graduates
• India has a population ~1.37B in 2020 and is expected
to reach ~1.47B by 2025 with ~80% working
population
• With such a high population, even niche products have
significant market potential
• Increase in economy led to increase in incomes and
purchasing power -> increase in consumption
Changing perception
towards entrepreneurship
• The success stories of remarkable exits and India’s first unicorns have
received much media attention
• Subsequently, some founders have become India’s “startup heroes”,
contributing to a current image of entrepreneurship as “cool” and
“glamorous”
• Despite some hype, the social acceptability of entrepreneurial
careers is increasing
Drivers of Indian
startup ecosystem
• Reasons for increase in foreign tech investment -> Strong bilateral ties
with several countries and perception of an alternative to China
• Companies like American Express, Microsoft and Apple investing
heavily to open their R&D centers in India
• India is now the tech garage of the world with US and EU offshoring
~80% of their IT operations to India
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Later stage funding accounted for ~35% of the total funding during 2016-20
~28% of total investments during 2016-20 were in US$ 50M–100M ticket size
Indian startups raised ~US$ 63B during 2016-20 with ~65% investment in growing startups i.e. seed-series D rounds
Source(s): Tracxn, Praxis analysis
0.6 0.6 0.7 0.7 0.3
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2016 2017 2018 2019 H1 2020
Investments in Indian startups by stagesUS$ B, 2016 – H1 2020
Seed Series A Series B Series C Series D Later
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7.4
20202019201820172016
Investments in India startups by deal sizeUS$ B, 2016 – H1 2020
< US$ 5M US$ 5M - 25M US$ 25M - 50M US$ 50M - 100M
US$ 100M - 500M > US$ 500M
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Tech enabled startups have dominated the early stage funding landscape in India
Notes: MP – Marketplaces, LP – Listing platforms, AG – AggregatorsSource(s): Praxis investment database, Praxis analysis
SaaS / AI
Fintech, 16%
IoT, 8%
Logistics tech, 7%
Analytics, 7%
HR services, 7%
Security, 7%
CRM, 6%
Healthtech, 6%
Digital marketing, 5%
AI / ML, 5%
Chat bots, 3%Edtech, 2%
Others, 22%
Fintech, 13%
Horizontal, 11%
Real Estate tech, 9%
Foodtech, 9%
B2B MP, 8%
Agritech, 7%
Apparel, 7%
Mobility tech, 6%
Logistics tech, 6%
Auto tech, 5%
Travel & leisure, 5%Furniture / appliances, 2%
Personal care, 2%
Others, 10%
Fintech, 48%
Media & entertainment, 29%
Edtech, 19%
Travel & leisure, 2%Others, 2%
Online Services
(MP/LP/AG)
Online Services
(Consumer apps/platforms)
Healthtech, 52%
Pharma &
biotech, 17%
MedTech &
supplies, 12%
Private healthcare
delivery, 8%
Consumer
healthcare, 8%
Others, 3%
Consumer
products
Food &
beverages,
32%
Personal
care, 21%
Apparel,
19%
Consumer
durables,
13%
Others, 15%
NBFC
, 71%
MFI,
15%
MFI,
15%
Logistics tech, 7%
Food & beverages, 5%
Co-working, 5%
IT services, 5%
Agriculture, 4%
Education, 3%
Deal value by sub-sectors (<US$ 10M ticket size)2017-2020*, US$ M
Total: US$ 2.5B
Others, 40%
~US$ 617M ~US$ 507M ~US$ 453M ~US$ 241M ~US$ 181M ~US$ 406M
Energy
Rene
wable
soluti
ons,
69%
Equip
ment,
28%
Others
~US$ 83M
~US$ 55M
Others, 3%
Tech enabled products,
23%
Manufacturing, 8%
Healthcare &
life sciences
BFSI
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Startup Industry Founded Funding How is it disrupting the industry?
Payments 2012 Acquired• Digital payments app based on Unified Payments Interface (UPI) available in 11 regional
languages with over 10M merchants
Defence,
military, and
others
2011 Acquired
• Uses robotics and AI to develop drone-based solutions to military, parliamentary and police
forces
• Also provides drone-based solutions for autonomous surveys, inspection, and to monitor assets
Foodtech 2014 US$ 1.62B
• Enhanced customer experience by developing an app that seamlessly connects the user to
local restaurants and delivery partners
• Leveraging AI / ML to create models that will personalize user experience
Healthtech 2015 US$ 323M
• Aids to connect local pharmacy stores and diagnostic centers in order to fulfill extensive
medical needs
• Uses wide variety of open source and proprietary technology to verify prescriptions and make
the customer experience seamless
Shared
mobility2017 US$ 212M
• Leverages IoT and analytics to provide electric bikes to its customers in dense places and
solves two problems at once – traffic congestion and air pollution
Media &
Entertainment2007 US$ 205M
• Leveraging machine learning to curate hyperlocal news content in vernacular languages
based on user profiling, pivoting towards a social platform
Home
interiors2015 US$ 200M
• Uses their proprietary technology platform to deliver end-to-end home interior project
• Designers can manage the entire design project using the software - create designs, access a
digital catalogue, plan the budget, chat with clients, place manufacturing orders, etc.
Agritech 2012 US$ 17M
• Technology-based platform offering end-to-end agricultural services to farmers
• Services may include distribution agri inputs, customized farm advisory, access to financial
services, and market linkages for selling their produce
Agritech 2010 US$ 16M• Enable data-driven farming which helps derive real-time insights on standing crop projects
across geographies based on local wealth information and high-resolution satellite imagery
Tech-led startups are disrupting industries across India
Source(s): Secondary research, Praxis analysis
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Startup Industry Founded Funding How is it disrupting the industry?
Edtech 2011 US$ 2.1B
• Created an app to deliver high impact lectures in an engaging way to make difficult concepts
easy
• Caters to India’s large K-12 market by providing subscription model and has slowly advanced
into the US
Foodtech 2008 US$ 975M
• Enhanced customer experience by developing an app that seamlessly connects the user to
local restaurants and delivery partners
• Expanded overseas into multiple countries within a few years
SaaS 2010 US$ 649M• Create software management products that help sales, marketing, support, IT, and HR teams
to deliver the best customer experiences
Gaming 2008 US$ 160M*
• Pioneered the Fantasy Sports Gaming market of India and are the leader with ~90% market
share
• Tapped into the enthusiastic Indian cricket market by introducing an app that is easy to use
SaaS 2010 US$ 91M
• Enables customers and employees to use personal devices, assuring safety and convenience
• Leverages AI to increase convenience, with intuitive booking, less wait-times, and automatic
check-ins and payments
SaaS 2013 US$ 77M• Leverages machine learning, it offers an engagement suite that enables brands to convert,
engage, retain, and grow their mobile user base
Payments 2014 US$ 60M
• Creating a transparent, convenient, and cost-efficient process using their website / app for
individuals by redefining the remittance industry
• Grabbing market share from the traditional players that have high hidden costs
SaaS 2016 US$ 29M• Uses artificial intelligence and deep learning algorithms for medical imaging
• Helping cut down the diagnostic time for chest and brain problems
SaaS 1996 - • Web-based online application suite for the businesses
And Indian innovation is going global…
Note(s): *Uptil April 2019Source(s): Secondary research, Praxis analysis
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Tech outsourcing service demand from global majors present in India has further boosted startup ecosystem in India
Source(s): Secondary research, Praxis analysis
BFSI
Online Services
(MP/LP/AG)
Telecom
SaaS/AI
Healthcare & Life
Sciences
Online Services
(Consumer app /
platform)
Transportation &
logistics
FMCG
IT services
12© Praxis Global Alliance |
Across the lifecycle of a tech-led product, developers need to use a wide array of development tools…
Pre-design
• Identifying core concept and
objectives
• Research and analysis to
understand required
technologies during design
and development phase Design
• Create wireframes, architecture frameworks and
models for the development phase
• Creating concepts -> using 2-3 versions of the product
and explore various ways each could be treated visually
• Assimilate feedback from users and finalize for
development phase
Development
• Create MVP and beta
versions of the product / app
• Create infrastructure for
scaling up
1
2
3
4
Testing
• Test functionality, usability and UAT
• Perform stress tests to understand
potential issues
• Launch MVP to get feedback from
the users / stakeholders
5
Production
• At scale production / deployment
• Create support infrastructure for and
failure continuity
• Perform QA and testing
6
Support and after sales services
• Create user feedback
mechanism
• Provide after customer support
and warranty
13© Praxis Global Alliance |
About IVCA
This is a wonderful report covering data and insights on the booming Indian tech startup
ecosystem, carrying a fresh perspective about developers and service demand.
The growth stage startup and venture capital ecosystem is poised for the next leap with an
increasing number of unicorns, soonicorns and minicorns, even amidst the current crisis of
Covid19. The ecosystem has been relentlessly working to boost the investment environment,
the Government of India is playing a crucial role in this, but most importantly, the growth stage
investors are continuing the momentum, filling a void for startups that have just crossed their
mid life or are at the inflexion point where they, very much need this capital to scale and
expand.
IVCA is the oldest and most influential PE & VC industry body in India, its
purpose is to promote the Alternative Investment Asset class. IVCA
supports the ecosystem by facilitating advocacy discussion with the
Government of India, policymakers, regulators, and supports the
entrepreneurial activity, innovation, and job creation in India.
Rajat Tandon
President, IVCA
14
(FIG)
About Praxis
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We work with leading financial sponsors and strategic investors to identify
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enables clients to deploy our capabilities on any deal.
Fund strategyHelp investors in identifying growth drivers, investment themes, attractive
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Madhur Singhal
Practice Leader
Ex-Partner at Bain & Co., BCG
MBA (IIM Ahmedabad), B.Tech.
(IIT Delhi)
Aryaman Tandon
Practice Leader
Ex-Bain & Co.
B.Tech. (IIT Delhi)
Vibhor Gupta
Practice Member
Ex-Samsung, Aditya Birla Group
PGDBM (XLRI, Jamshedpur),
B.Tech (DCE, Delhi)
Shishir Mankad
Practice Leader
Ex-EVP Axis Bank, BCG
MBA (IIM Ahmedabad),
Chartered Accountant, M.Com
Abhishek Maiti
Practice Member
Ex- Reval
MBA (IIM Indore),
B.Tech (IIT Delhi)
Varsha Agrawal
Practice Member
Ex-Nomura
Masters in Finance (Esade
Business School, Spain)
CA, CS, B.com. Hons. (NMIMS)
Charul Agrawal
Practice Member
Ex- PwC US Advisory
MBA (IIM Ahmedabad),
B.Tech (IIT Delhi)
Sumit Agrawal
Practice Member
Ex-Nomura
MBA (IIM Bangalore),
B.Tech (IIT Madras)