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India emerges as the third-biggest start-up market worldwide, with 4200 startups; attract $5 bn in 2015

India’s technology start-up landscape, which has seen phenomenal growth this year, has resulted in the country moving up to the third position globally in terms of  investments secured and number of start-ups. The total funding attracted by Indian  start-ups is estimated to grow by 125% to $4.9 billion in 2015 as compared to $2.2 billion last year.

India overtakes Israel as third-biggest start-up market in the world, just behind US and UK, stated a report prepared jointly by Nasscom and consulting firm Zinnov.

The number of start-ups in the country will cross the 4,200 mark, a growth of 40% by the end of 2015,  said R Chandrashekhar, president, Nasscom, on Tuesday while releasing the report.

Cumulative funding between 2010 and 2014 was just $3.2 billion, showing how significant this year has been for the start-up scene in India.

“India is the youngest start-up nation in the world as 72% of the founders are less than 35 years old. There has been a 50% rise in share of  female entrepreneurs in 2015 over 2014. Overall, 9% of all start-ups are founded by female founders and co-founders. Nasscom has been partnering with the governments for start-up warehouses to create a micro-ecosystem where starts-ups and entrepreneurs can work together,” said Ravi Gururaj, chairman, Nasscom Product Council.

NCR, Bengaluru and Mumbai account for over 93% of the total investments, and 66% of all starts-ups are concentrated in these three cities. Hyderabad, Chennai, Pune, Jaipur and Ahmedabad are the major upcoming start-up locations.

In 2015 alone, around 1,200 new starts-ups have been set up and a majority of them are B2C, primarily present in three segments such as e-commerce, consumer services and aggregators.

The report has highlighted that there has been a 2.3x growth in number of active investors, growing digital consumer base, mobile first population, improving political environment and high interest from global investors.

Global investors are betting big on the India market with Tiger Global, Sequoia Capital, Softbank, Warburg Pincus and Alibaba being the top investors, participating in deals worth over $500 million. Investors have access to more exit opportunities with more than 65 M&A deals in 2015, worth close to $800 million.

While overall VC/PE funding has grown by 2.2x over 2014, seed stage funding has grown by an incredible 6.5x.

This year more than 390 starts-ups have received funding as compared to 175 starts-ups in 2014, the report revealed.

The number of incubators and accelerators grew by 40% from about 80 in 2014 to about 110 in 2015.

Nearly 50% of the incubators/accelerators are set up outside NCR, Bengaluru and Mumbai, providing an opportunity to entrepreneurs from non-metro cities, the report said.

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