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How Healthy Is India's Start-Up Industry? Nasscom Says It Is Doing Fine, But...

IT city Bengaluru is among the top three cities globally for the launch of tech start-ups.

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Bengaluru is among the top three cities globally for the launch of tech start-ups

Highlights

  1. More than 1,200 start-ups added in 2018, says Nasscom
  2. India third largest start-up ecosystem across the globe, it adds
  3. IT industry body says fall in seed funding of start-ups a concern

Every year, industry body Nasscom brings out a report on the health of India's start-up ecosystem. In its report released in Bengaluru on Thursday, it declared that the industry, the third largest start-up ecosystem in the world, was doing well.

Investments are up to more than $4 billion this year - more than double the $2-billion investments last year. More than 1,200 new tech start-ups have entered the industry - and around 40,000 new jobs created.

The highest number of unicorns - firms with investment of more than $1 billion - in any calendar year - was seen, with eight new unicorns.

Nasscom President Debjani Ghosh told NDTV, "The trends we are seeing are absolutely in the right direction. It is a roughly 7,200 to 7,700 strong ecosystem. Indian has a total of 18 unicorns of which eight were last year alone. More interestingly, the time to unicorn has done down to about five to six years for India. And we are pretty much catching up with China where it is four to five years. What it is telling you is that there is market, the right kind of funding coming in - and of course the right kind of entrepreneurs with the right kind of products."

But the continuing fall in seed funding of brand new start-ups continues to be a concern with investors preferring to put their money into tried and tested businesses. Nasscom hopes the government and industry will help.

Ms Ghosh said, "Seed funding has continued to fall. Not a surprise given the way the ecosystem is maturing. It is quite normal for investor mindset to move towards the more mature companies. Usually in these scenarios the government steps in - with not just funds but a more structured approach to ensure that the seed stage is healthy. We have to have enough room for failure. We have to create an environment where people can come in, experiment, fail, come up with the next idea."

"The biggest thing government can do is buy from start-ups. That is my biggest ask to government - more than funding, more than giving them space."

The percentage of women founders of start-ups rose slightly from 11 per cent to 14 per cent - and while this was in the right direction, Ms Ghosh said it was not much to celebrate. "I'll take that. The movement is in the right direction. Can it move faster? Absolutely. And I think that is what the focus is on. We are also seeing that women start-ups are no longer limited to 'woman areas' and I have no idea what that means! People used to think women would only be in retail or cosmetics or whatever nonsense. We are seeing some absolutely brilliant women in deep tech."

While Bengaluru, Delhi-NCR and Mumbai remained the biggest start-up areas, 40 per cent of start-ups emerged from smaller towns like Indore, Jaipur, Pune and Kochi. IT city Bengaluru is among the top three cities globally for the launch of tech start-ups.

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