Recently, a news story went viral about an intern informing their CEO of quitting to pursue their AI startup since he got VC funding. This incident highlights the thriving startup ecosystem in India, which has become a major contributor to the nation’s economy.
As of December 2023, DPIIT(Department for Promotion of Industry and Internal Trade) recognizes 117,254 startups, which have created over 1.24 million direct jobs, significantly impacting the economy.
In this edition of “The People Weekly,” we will explore the growth and future of the startup ecosystem.
Indian Startup Story
The Indian startup landscape is not a recent phenomenon. While its roots trace back several decades, the remarkable growth and attention it has garnered in recent times can be attributed primarily to the surge of entrepreneurs supported by a robust network of angel investors and venture capitalists.
As per Statista, till April 2024, there are over 127 thousand DPIIT in India. Now this is a huge jump as compared to 450 in the year 2016. At present, there are over 110 unicorns, 5000+ angel investors, 1400+ VCs and 1100+ private equity firms (data taken from Inc42). There are also 1200+ incubators and accelerators engaged in supporting the startup ecosystem.
Major factors contributing to the phenomenal growth of the Indian Startup Ecosystem are
- Government Initiatives: Various policies and incentives introduced by GoI to promote entrepreneurship, such as tax benefits, funding programs, and regulatory reforms are a major contributor to the startup growth. For example, “Digital India Initiative” has accelerated the adoption of technology and internet penetration, creating a conducive environment for startups. This flagship program Startup India Initiative provides a single-window platform for startups to access various government services and support.
- Abundant Talent Pool: India boasts a large and skilled workforce, especially in technology and engineering. This has attracted global companies and investors to set up operations in the country. Out of 7 million college graduates, 55% favoured working in startups. (data taken from startupindia.gov.in)
- Cost and Ease of doing business in India:One of the government’s key priorities has been to reduce the cost and complexity of doing business in India. By simplifying procedures, decriminalising minor offences, and digitising processes, the government has created a more conducive environment for startups to thrive.”
- Increased investor interest: The availability of venture capital funding has enabled startups to scale up their operations and compete globally. In fact, as per a report in Economic Times, the first half of 2024 has already seen a 45% increase in VC funding as compared to last year.
- Technological Advancements: The rapid advancements in technology, such as artificial intelligence, machine learning, and blockchain, have provided opportunities for startups to develop innovative solutions.
- Favourable Demographics: India’s young population, esp Gen Zs boasts of a large number of tech-savvy individuals, and has fueled the entrepreneurial spirit and Innovation.
- Corporate Connect: Many large corporations are recognising the potential of startups and are increasingly collaborating, partnering and investing in them. For example , IBM is partnering with 100 Indian big data and IoT start-ups, and Apple recently acquired Tuplejump – an AI-based startup from Hyderabad
Startup ecosystem
Bengaluru remains the city with the most number of startups, with Delhi-NCR and Mumbai in second and third place respectively. In fact, a recent global ranking of startup cities placed Mumbai at 32nd and Bengaluru at 34th position. Tier 2 and 3 cities in India are also now home to 45% of all startups in India. As per a report by DPIIT 56000, startups were recognized as belonging to Tier 2 & 3 cities like Jaipur, Ahmedabad, Indore etc.The government is eyeing one startup in every district by 2025.
Major sectors in the startup ecosystem are
- E-commerce
- Fintech
- Cleantech
- Healthtech
- Foodtech
- Agritech
- Transport & Logistics Tech
- Edtech
- E&M (entertainment & media)
- Travel & Hospitality tech
- Deeptech
- Spacetech
- AI startup
Of these, space tech, deep tech and startups in EV and AI are emerging sectors. In fact, India ranks 6th globally in the deep tech startup ecosystem.
The top most funded startups in 2023 are
Job Creation by Startups
Startups have been instrumental in creating a significant number of jobs across various sectors in India. As of October 2023, the 1.14 lakh startups recognized by the government under the Startup India initiative have generated more than 12 lakh jobs. A CII & McKinsey study has predicted that Indian startups will create 50 million jobs by 2030.
Key sectors that have seen a surge in job creation due to startups include:
- Technology: Software development, IT services, e-commerce, fintech, and artificial intelligence (AI)
- Healthcare: Healthcare technology, medical devices, and telemedicine
- Education: Edtech platforms and online learning
- Logistics and transportation: Logistics startups and transportation technology
- Retail: E-commerce and online retail
Also soft skills like creativity, communication skills and emotional intelligence will be sought after in candidates hired for a startup.
Startups have not only created direct jobs but have also indirectly contributed to job creation in related industries, such as manufacturing, logistics, and customer support. The growth of startups has been particularly significant in Tier 2 and Tier 3 cities, providing employment opportunities in regions beyond the major metropolitan areas.
Hiring Trends & Challenges
Some of the hiring trends in startups are flexible work options (remote/hybrid) in order to attract a wider talent pool, focus on skill based hiring rather than experience/education and adopting agile hiring practices, such as rapid interviews and decision-making processes, to meet their fast-paced growth requirements.
At the same time, the fast-paced and unpredictable nature of startups can make it challenging to attract candidates who seek job security and stability. Also, Startups may struggle to attract talent due to their lack of brand recognition compared to established companies. Retaining top talent due to rapid growth, changing priorities, and the allure of larger companies is another major challenge faced by startups. Startups often have limited budgets and resources, making it difficult to compete with larger corporations for top talent.
PeopleLogic Opinion
The startup boom in India shows no signs of slowing down, with new ventures being founded and funded daily. The supportive ecosystem will continue to nurture growth, expanding into new sectors and making significant contributions to the GDP. To further accelerate this momentum, we must foster entrepreneurship, provide adequate support, and create a favorable environment. By embracing innovation and investing in startups, we can shape the future of India’s economy.
Startups often face unique challenges when it comes to hiring. Their rapid growth, limited resources, and need for specialised talent can make the recruitment process complex and time-consuming. PeopleLogic, one of top recruiting firms in India, has been partnering with startups to fulfil its talent needs.Our extensive network and industry expertise allow us to access a diverse pool of qualified candidates, even for specialised roles. Whether you’re seeking leadership roles, senior management, mid-management, or tech hiring or non-tech hiring, our expertise in tailoring recruitment solutions to the unique needs of startups has established us as a leading recruitment agency in India.
