From 2014 to 2023: How the startup ecosystem is thriving in India despite all odds? Explained

Entrepreneurship is in the air! India has witnessed an unprecedented surge in the creation and funding of startups in the last ten years as the country solidified its position as a major global center for innovation and businesses with a rise in the number of tech companies in India to 122,000 to date, with a peak in 2020, witnessing more than 16,000 new additions. 

A significant change has also occurred in the funding landscape, with 2020 and 2021 seeing the highest levels of investment over the previous ten years. Investment firms, angel investors, venture capitalists, and private equity firms have demonstrated a remarkable level of confidence in Indian startups, despite the obstacles encountered in the funding landscape in 2023.

With a total funding of $8.4 billion in India in 2023, the funding scenario—both from Indian and international investors—has been encouraging and shows resilience in the face of market uncertainties.

Top performing sectors 

Several factors like increased internet penetration, digitization, and government initiatives have fueled the growth of top-funded sectors from 2014 to 2023 in India. These sectors include Retail, Enterprise Applications, Fintech, Transportation & Logistics tech, Food & Agriculture tech, Auto tech, Travel & Hospitality tech, and Edtech, the Tracxn report said. 

In the Deep Tech (R&D oriented) sector, Indian investment has been increasing steadily over the years with total funding of $6.73 billion, and in a decade, it received $6.23 billion, reflecting the country’s steady growth and commitment to science and technology. This trend emphasizes the importance of technology-driven innovation in shaping India's future.

New emerging sectors

Various new sectors such as DeepTech, SpaceTech, Artificial Intelligence, and EVs have broadened the Indian startup landscape. The Tracxn report stated that DeepTech has seen a rise in funding, reaching $2.1 billion in 2022, while the EV industry has seen $4.8 billion in funding in the past ten years. 

On the other hand, Space Tech has also been in demand after its transformation which is credited to privatization. India ranks seventh in terms of funding within the International SpaceTech landscape to date. The funding reached $114.9 million in 2022 and $122.2 million in 2023 and will continue to grow.

Top favorable cities for startups

Bengaluru remains the startup hub as the Karnataka capital received total funding of $70.4 billion in a decade, the report said, adding that Delhi-NCR and Mumbai stand at second and third spot respectively. 

Besides metro cities, several successful startups have also emerged in non-metropolitan areas such as Jaipur which has secured its position among the top cities in FinTech funding with $214 million in 2023. 

Startups in unicorn club

Indian startup ecosystem marked a major milestone by welcoming the 100th venture into the unicorn club in 2022. As per the Tracxn report, India has 111 unicorns as of now, with 355 promising ones poised to join the ranks soon. This showcases the dynamic and flourishing nature of the Indian startup ecosystem, with unicorns contributing to the nation's entrepreneurial landscape.

Rise of women-led startups

Over the past decade, women played a significant role in driving India's entrepreneurial advancements. Women-led startups have also seen growth in the past ten years with total funding for these companies reaching $1.1 billion in 2023 from $0.456 billion in 2014, Tracxn reported. 

Twenty of the total unicorns founded to date are women-led businesses, demonstrating the growing and significant influence that women have on the development of the country's startup scene. 

Job creating by startups

According to the Economic Survey 2023, one of the most notable accomplishments of the Indian startup ecosystem has been the generation of jobs, with startups creating around 10 lakh jobs till 2023. 

Moreover, notable investments have been made in startups that emphasize professional upskilling and ongoing education, demonstrating the industry's dedication to worker empowerment.

Future of Indian startup ecosystem 

Indian economy is intricately tied to the success of its startup ecosystem. The country's economic outlook remains optimistic, with a projected annual growth rate of 6.3% (as per IMF data) in 2023–24. The government's continuous support for the tech ecosystem is reaffirmed in the 2023 budget, which includes programs like tax breaks and the Drone Shakti Program.

The long-term prospects are still promising as the IMF projects that India's economy will grow to become the third largest in the world by 2027. An uptick in investment activity is anticipated in the upcoming years as the world economy stabilizes, solidifying India's standing as a top investment destination.