We often hear that the Indian start-up ecosystem has taken off, that it has entered a new phase, that the ecosystem is accelerating. Acceleration means scaling up. The Indian start-up ecosystem is producing companies that are not only scaling up but also becoming unicorns or companies with over a billion dollar valuation.
At the end of 2017, India had about eight unicorns. Today, there are 30. Yet another nuance of the ecosystem is the fact that the time to becoming a unicorn is shrinking - while it took well over five years for Flipkart, Udaan, a business-to-business e-commerce firm, did it in two.
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Why is this time span shrinking? At Business Today's annual conclave MindRush in Mumbai, four venture capitalists got together to explain. Anjali Bansal of Avaana Capital, Karthik Reddy, Co-founder of Blume Ventures, Rehan Yar Khan, Managing Partner of Orios Venture Partners, and Tej Kapoor, Managing Director and Head of Fosun RZ Capital India, pointed to a confluence of factors.
People are spending more time online; the management teams of many start-ups have experienced professionals or those who have worked with successful consumer Internet companies such as Flipkart before; the markets are getting larger too. Finally, there is enabling telecom infrastructure.
Rehan Khan underlined that over the last two decades, India's GDP has grown at a faster clip. The rising economic tide lifted people's disposable incomes. That created demand. Other infrastructure blocks such as payment systems fell into place more recently. While the cost of mobile handsets dropped as Chinese handset makers infiltrated the domestic market, the cost of data fell too - Reliance Jio changed the game over the past two years. Many more Indians are now accessing the Internet, expanding the addressable markets start-ups target.
So, what can India, particularly the Indian government, now do to accelerate the number of unicorns, take it to a 100 from 30 now?
The panelists in the discussion all agreed the government shouldn't over-police - over-policing kills disruption. Technology companies will always push the envelope on regulation but the government must listen. Tej Kapoor pointed out that China supports their start-ups a lot more in terms of subsidies, etc. "We can have a new exchange where unprofitable companies can list and raise money," he suggested.