The role of a maturing entrepreneurial ecosystem in fostering startup growth in India

As per a recent study on the Indian startup ecosystem, * “In a country with a population of nearly 1.3 billion people, even niche products can have a significant market potential.” When one looks at combining this with a maturing entrepreneurial ecosystem and the fact that “the number of internet users is projected to reach 666.4 million in 2025”, one can see the huge potential for startup growth in India. So how does a maturing entrepreneurial ecosystem foster startup growth in India?

  1. Entrepreneurship has become a recognized career choice: With recent startup success stories, new entrepreneurial role models and high valuation of locally built technology companies, being an entrepreneur today has become more socially accepted.
  2. There is access to risk taking capital: Even 20 years back only business families or people with networks could get access to capital. However, in the last 10 years alone, we have seen a growth in both, initial funding for startups in India and angel investors for startups in India. This has allowed many first-time entrepreneurs to get access to risk taking capital that was otherwise only accessible to a privileged few.
  3. Investors recognize the impact of disruptive innovation: Uber, Facebook, OYO, Amazon are all examples of technological disruption that have changed consumer behavior. In a country like India, where we need technology solutions to solve problems on the ground, investors have realized that long term multifold return can also be earned by investing in disruptive business models in new industries.
  4. Technology has become an enabler: The cost of building an app or software solution is no longer a deterrent for new companies, especially where today we have the cheapest data in the world. This has allowed many entrepreneurs to take the risk and bootstrap their venture to show a proof of concept and initial traction, before going for a fund raise. Today technology is an enabler for new ideas to come to life.

As we see a growing startup ecosystem develop across the country in cities i.e. Bangalore, Delhi, Mumbai and several others, we see more people get encouraged to take the entrepreneurial path. As an ecosystem provides entrepreneurs with a networks of other startup investors, successful entrepreneurs and mentors, to connect with, as they embark on their entrepreneurial journey of trying to build a successful business venture.

*Observer Research Foundation paper on “The Indian Startup Ecosystem: Drivers, Challenges and Pillars of Support.” By Sabrina Korreck.

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