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Feeling lazy to go to the market? Call Dunzo (an online delivery service), (a+b)^2 seems like a mystery? BYJU’s has a solution, short on cash? Paytm Karo!!. ‘Startup’ has become the buzzword among millennials and for the right reasons. India ranks third globally in terms of its ‘startup ecosystem’ after USA and China. India is currently placed at the 57th place in the Global Innovation Index and Bengaluru ranks as the third best city in the world to open a startup. India added 1200+ startups in 2018 alone and there was more than 50% growth in the number of ‘Advanced Tech’ startups. In 2018, there was quantum jump in the number of unicorns or privately held startups that are valued at over $1 billion with 8 startups including Freshworks, OYO, Swiggy, Billdesk, Paytm Mall, Policybazaar, Udaan and Byju’s entering the unicorn club. In 2019, more startups like Practo, Big Basket and MobiKwik are expected to cross this much coveted mark. (NASSCOM & ZINNOV, 2018) This represents a paradigm shift in the Indian economy.

There is a perceptible change in the way Indian society views entrepreneurship and innovation. Earlier, the society harboured a very conservative view and the very idea of opening a startup, leaving a settled job was frowned upon. Apart from this, funding was a major problem. Back in the 2000s, India’s network of seed and angel investors, venture capitalists and private equity investors was very weak. But, today creativity is actively encouraged as evident by the number of straight out of college entrepreneurs, government initiatives, increasing number of business plan and entrepreneurship competitions in schools and colleges, support from faculties and mentors in premier institutions like IITs and IIMs and most importantly, failure is being seen as the stepping stone to success. (Ramakrishnan, 2019) Today 35% of the startup founders are engineering and MBA graduates. There has been a consistent rise in the number of women entrepreneurs with their share increasing 14%. Rashmi Daga, winner of the ET-Facebook Woman Ahead award and the founder of FreshMenu is one such example.

Bangalore, Delhi & NCR and Mumbai still remain the prime cities to operate a startup but startups are rapidly expanding especially in tier II and tier III cities to tap the immense potential. These emerging centres include the cities of Hyderabad, Pune, Chennai, Chandigarh, Jaipur, Indore, Kerala etc. Many factors are responsible for the growth of startups in India. Growing network of incubators which help startups in their initial phase by providing them office space, research labs etc. and accelerators which help startups in fundraising, building customer base, market expansion, peer knowledge etc. In 2018, there were more than 210 active incubators and accelerators and almost 38% of them were based in tier II or III cities. 9 Log materials, a Nano materials manufacturing and R & D startup founded in 2015 in Saharanpur, incubated under TIDES, IIT Roorkee’s incubation centre, now has 2 patents in graphene synthesis and graphene products.

Government backed programmes like the Atal Tinkering Labs for students of class 6 to 12 to develop innovative solutions using robotics and 3D printers, Fund of funds for startups, Startup India Learning Programme, fast tracking of patents and trademarks filing process, addressing regulatory concerns, tax exemption schemes like abolition of angel tax and National Initiative for Development and Harnessing Innovations etc. are driving the growth of startups. Schemes like Make in India, Skill India and Digital India are complementing these efforts. According to the World Banks’s Doing Business Report (DBR 2019), India has made a galloping jump of 23 notches in the Ease of Doing Business rankings and is currently ranked at 77th position out of 190 countries. India showed an improvement in six of the 10 parameters, having witnessed a leap of 129 notches in ‘construction permit’, 66 in ‘trading across borders’ and 19 in ‘starting a business’.

Merger & Acquisition activity has picked up momentum in the startup industry. The Walmart – Flipkart deal made headlines. Such merger and acquisition deals are creating synergy in the market as companies combine their tech capabilities, expand their market coverage and tap the human resource potential. An American business related reality television series  ‘Shark Tank’ displays how budding entrepreneurs try to receive funding by pitching their idea to a panel of investors. Truly, the market for startup funding is nothing short of a shark tank. But the trends look promising. The total amount of funding has increased by 108% from $2bn in 2017 to $4.2bn in 2018. OYO Rooms was the biggest gainer. It raised $1bn in funding from Softbank, Lightspeed and Sequoia Capital. This made OYO, the most valuable startup in India. It was followed by Paytm Mall, Swiggy, Udaan, Curefit, Sharechat, Lending Kart, Grofers and Qtrove. Together these ten startups raised 58% of the total funding. After the foundation stage called the seed stage comes further rounds of fund raising called A, B, C and so on. Late stage funding that is Series C, D, E, F rose from $847 million in 2017 to $3 billion in 2018. This shows the growing maturity of Indian startups. (NASSCOM & ZINNOV, 2018)

There is a huge disparity between the kind of services available in the rural and urban areas. Akshay Kumar’s character’s idea of providing low cost sanitary napkins  to women in the movie ‘Padman’ to promote menstrual hygiene clearly summarises the role social entrepreneurship can play to bridge this disparity gap. Gramin Healthcare, a Gurgaon based HealthTech startup aims to provide quality healthcare at the most affordable prices. It has opened many kiosks where a nurse conducts an examination and connects the patient to a doctor through a live video or audio feed using the Grameen Healthcare platform. It claims to have over 103 manned operational clinics and has conducted over 3900 health camps in tier IV cities.. (Kashyaap, 2018)

The Annual Status of Education Report (ASER), 2018, results of a yearly survey conducted by the NGO Pratham show that class VIII student cannot solve a basic numerical division problem and more than a quarter of them cannot read primary level text. This shows that ‘one size fits all’ model is not working and learning in our country is driven by the fear of exams and over prioritisation of grades. We need to explore alternate models of learning. EdTech startups can provide a solution. Digital evolution and the boom in smartphone adoption are expected to redefine the way Indian students learn. Real-time book updates, online tutoring, edutainment, online test preparation, web-based research, and gamification — technology has the potential to change our traditional education system in many ways. (Das, 2019) As per a 2017 Google and KPMG report titled ‘Online Education in India: 2021’ online education in India is expected to grow eight times to 1.96billion dollars and have around 9.6 million users by 2021. (Khaitan & Et., 2017) In 2018, Indian EdTech startups received close to $700 Mn in funding — an 85% jump from the $375 Mn funding in 2017 (of which $230 Mn was invested in BYJU’s alone).

Having said that, the enormous inequality in access to quality education in India across rural and urban areas must be addressed.  The monthly spending on education for the top 5% of urban Indians was INR 908.12. For the bottom 5% of rural Indians, it was INR 7.54. The minimum value of a course by BYJU’s is INR 23,000 per annum and INR 10,000 per annum for a course by Toppr. (Das, 2019) But some startups have taken up the task to improve the situation.

Learning Delight, a Gujarat based EdTech startup provides digital learning tools such as quizzes, puzzles, riddles to aid learning and is functional in 4400 rural government schools spread across nine districts of Gujarat. Learning Delight selects schools with the government-run Computer Aided Learning programme, and installs the software incorporated with e-books and multimedia components in those schools. (Kashyaap, 2016) Bengaluru-based Hippocampus Learning Centres (HLC) was founded by Umesh Malhotra in 2010 with the idea of opening pre-primary schools in the Tier IV towns. HLC runs a network of around 300 primary school centres with 700 teachers in Karnataka alone, benefiting over 11,000 children. The startup recruits, trains, and manages a network of teachers in rented village centres, and charges an affordable monthly fee for quality educational services based on international best practices. (Apurva, 2018)

Svadha, is an Odisha based  sanitation business founded in 2013 supported by ‘The Toilet Board Coalition’, an alliance that supports innovative, market led solutions to sanitation. Svadha has developed the ‘SaniMark’ platform, a mobile application that offers affordable, quality sanitation products for ‘micro-entrepreneurs’ – small-scale shopkeepers selling sanitation products like toilet bowls, pipes, basins, bathroom fittings etc. It also offers its micro-entrepreneurs initial training to help use a smartphone app for procurement and after sales support to their consumers with toilet insurance and optional cleaning services. (Sarin, 2018)

The aforementioned examples highlight that Startups have the ability to provide new age solutions to the challenges faced by India. Thomas Edison once said, ” There’s a way to do it better – find it.” ‘Have an idea sirji?’ – This is probably the right time to execute it for it has been rightly said, ”What good is an idea, if it remains an idea?. Try. Experiment. Iterate. Fail. Try again. Change the world.”

 References –

Apurva, P. (2018, July 24). These startups aim to improve education in rural areas. Yourstory. Retrieved from the website: https://yourstory.com/2018/07/startups-aim-improve-education-rural-areas

Das, A. (2019, February 6). Dear Indian Edtech Startups, Taking The Traditional Education System Online Is Not Disruption. Inc42. Retrieved from the website: https://inc42.com/features/dear-indian-edtech-startups-taking-the-traditional-education-system-online-is-not-disruption/

Kashyaap, S. (2018, June 27). Kiosk by kiosk, this healthcare startup is transforming healthcare for rural India. Yourstory. Retrieved from the website: https://yourstory.com/2018/06/kiosk-by-kiosk-this-healthcare-startups-is-transforming-healthcare-for-rural-india

Kashyaap, S. (2016, September 1). Learning Delight is changing the face of education in rural Gujarat, one school at a time. Yourstory. Retrieved from the website: https://yourstory.com/2016/09/learning-delight

Khaitan, A., Shankhwar, A., Jeyanth, N., Kharbanda, M., Dulipala, N., Jhunjhunwala, S. (2017, May). Online Education in India: 2021. KPMG

NASSCOM and ZINNOV MANAGEMENT CONSULTING (2018). Indian Startup Ecosystem 2018 – Approaching escape velocity. NASSCOM.

Ramakrishnan, N. (2019, January 27). How India became a Startup Nation. Business Line. Retrieved from the website: https://www.thehindubusinessline.com/specials/businessline-25/how-india-became-a-start-up-nation/article26104907.ece

Sarin, R. (2018, August 30). Svadha – developing a digitally enabled sanitation ecosystem in Odisha, India. GSMA. Retrieved from the website: https://www.gsma.com/mobilefordevelopment/programme/mobile-money/svadha-developing-a-digitally-enabled-sanitation-ecosystem-in-odisha-india/

Image credits – Startup Buzz

 

 

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Written By Premansh Sahni

I'm an undergraduate economics student at Lady Shri Ram College for Women and I love writing about finance and economy.

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