The Indian start-up ecosystem is an exciting place. Many new companies are joining the ecosystem every month, not just from technology but from domains as varied as logistics and healthcare. And many companies are scaling up very fast; some of them are even developing products and services for international markets.
Rajan Anandan, Managing Director of Sequoia Capital and President of The Indus Entrepreneurs (TiE) Delhi-NCR underlined some of these developments during a pep talk at the ongoing TiE Global Summit in Delhi. TiE was founded in 1992 in the Silicon Valley and is a non-profit organisation for entrepreneurs.
There are about 30,000 start-ups in India now. Delhi NCR, itself, has about 7,000 of them and 10 unicorns, or companies with a valuation of over a billion dollars, Anandan said. He pointed to three broad trends:
1. The start-up ecosystem is accelerating. At the end of 2017, India had eight unicorns. Now, India had between 24-30 unicorns. Two, the ability of companies to go from zero to 10 million users or 20 million users on the consumer internet side is accelerating since more people are spending time online.
The cost of data has crashed after Reliance Jio disrupted the telecom market a few years ago leading to more Indians using their smartphones. Meanwhile, the price of smartphones have crashed. Some companies such as Udaan have managed to become a unicorn in two years - that's a massive scale-up.
The time to becoming a unicorn is shrinking because the Indian market is maturing. The management teams of many start-ups are more seasoned as well versus what we saw five years ago.
2. Anandan said that the start-up ecosystem is broad-basing. There are technology companies of course but India also has logistics and gaming unicorns. India is broad basing beyond consumer companies as well.
Business to business (B2B) start-ups are suddenly in fashion. Currently, there are three unicorns in the B2B Software as a Serivce (SaaS) space. "We are going to see a lot of momentum on B2B SaaS side," Anandan predicted.
B2B companies, nevertheless, find it harder to scale compared to consumer companies. The reason is they have to hire sales people to sell. Unlike consumer companies, B2B firms cannot really depend on digital marketing or discounting. Their markets are often broad - the US, Europe, South East Asia - and not usually India.
3. Anandan also underlined that Indian start-ups have started going international. Even consumer companies are now developing products for other countries. They include Ola, OYO, and Paytm, among others.
The ecosystem, therefore, is entering a new phase - one that is about faster build out of companies.