Indian startups draw record investment

According to research firm Venture Intelligence, funding from foreign private equity and venture capital firms into Indian startups nearly doubled year-over-year to US$16.7 billion in 2017

May 22, 2018

This investment has been driven both by a rise in diverse capacity of the Indian startup space as well as by the promises of the growing Indian consumer base

The overall investment for private equity and venture capital entities in India touched an all-time high in 2017, and this pace is expected to continue in 2018

India has the world’s second largest startup ecosystem, expected to grow at a 10-12 per cent annual rate, with over 1,000 new startups being born every year

Usage of the latest in innovations such as artificial intelligence, machine learning, Internet of Things and blockchain has further driven efficiency in the startup space

The success of the ‘Startup India’ movement has been ascertained by a spike in foreign investment in the space. Funding from foreign private equity (PE) and venture capital (VC) firms into Indian startups nearly doubled year-over-year to reach US$16.7 billion in 2017, according to research firm Venture Intelligence. This investment has been driven both by a rise in diverse capacity of the Indian startup space as well as by the promises of the growing Indian consumer base. The overall investment in the PE/VC space in India touched an all-time high in 2017, and this momentum is expected to continue in 2018.

As per the Ministry of Commerce and Industry, India has the world’s second largest startup ecosystem, which is expected to grow at a 10-12 per cent annual rate, with more than 1,000 new startups being born every year. Besides Startup India, which supports entrepreneurs, the Government of India’s push for digitisation (Digital India), investment (Make in India), skill development (Skill India), e-governance, among other initiatives, has provided diverse opportunities for startups to play a significant role in the growth of the Indian economy, as a source of employment, innovation and industrialisation.

The Indian startup space has matured over the past five years with ventures targeting solutions, not just for individual customers, but for medium to large enterprises. Additionally, the usage of the latest in innovations such as artificial intelligence (AI), machine learning (ML), Internet of Things (IoT), robotics, blockchain and cloud computing has further driven efficiency in the startup space. Moreover, capacity in the Indian startup space has grown from partial manufacturing and servicing support to end-to-end as well as high-margin research and development activities that has attracted investor interest.