India is a favoured hub for upcoming start-ups

The average investment per round in a start-up is higher globally as compared to India

India has emerged as one of the top three global countries in terms of the number of start-ups founded. The total venture investment in start-ups in 10 years is estimated at Rs 1,11,700 crore, using 2015 as the base year. 

Actual investment could be much higher since details of investment amount are not available for many of the deals. The average investment per round in a start-up is higher globally, but the difference is not very large.

According to India Venture Capital and a private equity report prepared by the Indian Institue of Technology in Madras (IIT-M), the Indian start-up landscape has dramatically changed in the last few years.

 

Consequently, there is also a significant focus in creating a supportive policy framework to encourage start-ups. The IIT-M report focuses on the trends and ecosystem of start-ups in the country.

Thillai Rajan, a Professor at Department of Management Studies at the institute said that the Indian start-up landscape has been very vibrant in recent years.

The total venture investment in start-ups in ten years, beginning from 2005, is estimated at Rs 1,11,700 crore.

The average venture investment in investment flow is about 42 percent, while fundings have arrived for more than 10,000 start-ups during the same period. The average annual growth in the funded start-ups has been 16 percent. 

Moreover, the average age at which the start-ups get angel funding has consistently decreased from close to five years to around half a year in 2015.

In most sectors, there has been an Indian counterpart for every foreign start-up.  While many foreign companies have begun operations in India, the presence of an Indian start-up meant that the consumers within the country do not have to wait for an overseas company to begin operations in India.

Indian start-up landscape is very vibrant as seen by the number of companies founded, says the report.

However, a major concern would be the low proportion of funds for start-ups in India. For example, the global percentage of funds amassed by start-ups in grocery tech, healthcare and consumer healthcare, and smart home and home improvement are 41 percent, 52 percent, and 36 percent respectively.

The corresponding percentage for Indian start-ups are 5 percent, 10 percent, and 11 percent respectively. There is a time lag in terms of setting up and aquiring funds for start-ups between Indian and overseas companies. The growth and funding of Indian start-ups occurs later than their global counterparts.