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The Start-Up Ecosystem

Our special issue on start-ups looks at all the trends worth noting in the ecosystem today
twitter-logo Prosenjit Datta   New Delhi     Print Edition: July 14, 2019
The Start-Up Ecosystem
Prosenjit Datta

Every year when we do our annual survey of India's Coolest Start-ups, the applications we get give us important insights into how the start-up and entrepreneur ecosystem in the country is changing. A few years ago, we had a huge number of applications from entrepreneurs who dreamt of being the next big thing in the e-commerce playground. They looked for niches or business models that were not dominated by Amazon and Flipkart or Snapdeal. Most of those dreams died quickly.

Then, financial technologies became flavour of the year. Every second entrepreneur wanted to be a fintech company of some sort. Last year, we saw a record number of logistics start-ups and some very interesting ideas on how to solve both long distance and short distance freight movement problems. They were dramatically improving productivity in what had till then been a somewhat loosely tracked and disorganised sector.

Sifting through this year's applications was quite a revelation. Sure there were plenty of copycat ideas in the hundred-plus applications we received. But the number of people who were trying to solve problems had increased manifold. Some start-ups were also trying to make money while finding solutions to really big problems, including manual scavenging, air pollution and water wastage. I think start-ups will now probably play a big role in solving some of the issues that the state and Central governments are worrying about.

The start-up ecosystem has matured quite a lot over the past decade in India and some major changes stand out. First, while Bengaluru remains the country's start-up capital, the entrepreneurial spirit is spreading to other parts as well. Indeed, Gurgaon is now a big start-up hub in itself and it could give good competition to Bengaluru in the next few years.

Second, in most areas, there is likely to be no place for a number two or number three player. After initial angel funding, by the time a start-up is four or five years old, the venture capitalists have already started becoming extremely picky with each sector. The number one player attracts a disproportionate amount of capital and the others fade out.

Our special issue on start-ups looks at all the trends worth noting in the ecosystem today.

Moving on to the broader economy, the new Union Finance Minister Nirmala Sitharaman is gearing up to present her maiden Budget on July 5. She has plenty of challenges, including global trade uncertainty and the fact that the Indian economy has been slowing down. The problems all need hard reforms that focus on long-term benefits rather than short-term fixes. This government has got the mandate to take those decisions and I hope it takes them. Our pre-Budget special looks at the priorities before the government as well as the pulls and pressures it is likely to face.

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