Why Indian startups are set to open new frontiers with emerging tech

In the early days, it was not easy for startups in India to get investment or the right mentorship. Startups often moved their businesses more than 14,000-km away, to Silicon Valley, to get better access to financing and mentorship.

At that time, American venture capital firms were hunting for the next unicorn in the region. The network of angel, VC and corporate investors was still nascent in India. Despite all these disadvantages, a growing number of Indian startups showed all the makings of the next global giant: brilliant minds, the latest technology skills, a keen understanding of market needs, and most importantly, the audacity to change the way business is done. 

Today, India is the third-largest hub for technology startups. Indian startups such as online retailer Flipkart, ride-hailing app Ola and digital payments company Paytm have become global household names, attracting not only interest from financial institutions but also from Fortune 500 companies. 

According to a recent CB Insights report, startups in New Delhi and Bengaluru have closed nearly the same number of mega investment rounds as startups in London since 2014. Mega rounds are investment rounds greater than $100 million. 

Based on the report, New Delhi had 18 mega rounds, Bengaluru 21 mega rounds, and London 19 mega rounds. While still a long way from matching the level of investments in Silicon Valley startups, which attracted 158 mega rounds, the statistics show that ideas born in India are getting more attention from the global investment community.  

Indian startups are changing the competitive playing field especially in retail, finance and transportation. In the next decade, startup growth in India will be driven by the vast availability of IT talent, government initiatives including infrastructure support, and growing interest from national and international investors. 

Looking into the future, here are three important things to know about India’s startup economy as it enters its next phase.

Support systems are everywhere

With 5,200 technology startups, India is the third-largest startup ecosystem globally, according to the NASSCOM Startup Report 2017. 

The startup scene is growing rapidly. More than 1,000 startups were founded in the past year. The Indian government recognises entrepreneurship as a driver of job creation and innovation. Its Startup India programme provides resources and support for entrepreneurs, in cooperation with the private sector. Today, the Startup India initiative lists 125 incubators that guide startups from a business idea to a solid business model.

In the next decade, startup clusters will go beyond the initial hubs of Bengaluru, New Delhi and Mumbai. We will see startups popping up in secondary and tertiary cities such as Jaipur, Bhubaneswar, Pune and Ahmedabad. 

While bootstrapping is still happening, access to capital is improving.

India’s startups will open new frontiers with emerging technologies

Based on the NASSCOM report, 40% of all Indian startups are business-to-business (B2B) companies. We will see a growth spurt of startups in specific sectors, including healthcare, finance, retail, transportation as well as for emerging technologies that change multiple industries, such as blockchain and artificial intelligence (AI). 

One example is the AI company Niki.ai. The founders developed a digital shopping assistant, powered by AI technology, which can perform a variety of tasks ranging from mobile recharge to booking movie tickets to paying bills to getting a taxi. Niki simplifies all types of ordering tasks by using a simple chat interface, not only on its own platforms, but also on the apps of large brands, including ICICI Bank, HDFC Bank, Karbonn smartphones, among others. The company is also working on adding voice and multilingual capabilities to its bot. 

India’s startups will drive social change and empowerment of women

One of the most exciting sectors to watch is social enterprises.  An entire new crop of social enterprise startups are turning a societal need into social progress with a sustainable business model. 

There are two million social enterprises in India, according to a British Council report that maps the social enterprise ecosystem. About a third of these social enterprises - more than 600,000 companies - have a mission to empower women and girls. This includes giving them access to education, healthcare, and jobs. Social enterprises have the biggest potential to change our society, but they often also have the toughest time in getting support.

Dilipkumar Khandelwal is president-SAP Hana Enterprise Cloud and managing director-SAP Labs India. The views expressed are personal.

Dilipkumar Khandelwal