Start-up investments in India to see three-fold rise to $6.5 bn in 2015: Nasscom

Indian start-ups that received funding doubled to 400 in 2015, Nasscom said

India will witness about $6.5-billion (Rs 42,300 crore) funding in start-ups this year, as global investors look at investing in firms that build products and solutions for the local market, while using them for emerging markets in Asia, Africa and Latin America. India is the world’s third largest start-up hub.

Global private equity (PE) and venture capital (VC) firms spent $2.2 billion (Rs 14,300 crore) in 179 Indian start-ups in 2014. Till October, these firms doubled their investments to $4.9 billion (Rs 31,900 crore) and expect to increase them to $6.5 billion by the end of the year, according to industry body National Association of Software and Services Companies (Nasscom). Indian start-ups that received funding doubled to 400 in 2015, said a Nasscom report, released during the product conclave that began Tuesday. The report added investors had reaped returns in 2015, with exits touching $700 million.

India sees four start-ups emerge every day. Those who get funded get an average valuation of $2.7 million and nearly two thirds of them are concentrated in Bengaluru, Mumbai and the National Capital Region.

The number of start-ups in India is set to cross 4,200 by the end of 2015. About 1,200 technology start-ups were incepted in India this year, of which more than 50 per cent were in the e-commerce, consumer service and aggregator space. Unlike in the West, a majority of the Indian start-ups were focused on solving community problems using technology solutions in health care, education, social platforms, hyper local services and analytics. “Apart from positively impacting the lifestyles of citizens involved, start-ups are creating innovative technology solutions that are addressing the key social problems that India is facing and creating significant growth opportunities for stakeholders,” said R Chandrashekhar, president of Nasscom.  There are about 292 active angels and 156 active VC and PE players in the country.

The number of active investors has more than doubled from 220 in 2014 to 490 this year. Eight of the top-10 investing PE, VCs in India is foreign.

The number of accelerators and incubators has grown by 40 per cent over 2014 to touch 110. India has also emerged as the youngest start-up country with the average age of start-up founders at 28 years.

The second edition of 10,000 Start-ups Report has also accommodated a 10-point agenda for the government to cultivate the start-up culture of India, including definition of start-ups, taxing rules, regulations in terms of funding, online payments and branding.

FIGURE THIS

• Rs 31,900 cr Start-up funding till date in 2015 from PE/VCs
   
• $700 mn Exit value from start-up investment this year
   
• $2.7 mn Average valuation of Indian start-ups
   
• $95 mn Average weekly start-up fundings
   
• 72% Indian start-up founders who are less than 35 years old and makes India the youngest start-up nation