The elephant in the boom: Is India the world’s next startup nation?
Share on Facebook
Share on Twitter
Share on Google+
Share on Reddit
Share on Email

India’s high-tech industry believes it’s on the cusp of a “hyper-growth inflection point.” Meanwhile, half the country lacks access to toilets.

Type the words “Silicon Valley” into Google News and you’ll find a flood of articles claiming that Utah is the next Silicon Valley, or Nevada, or Berlin, or China or Africa. And that’s just this week!

It seems that every high-tech hub and its PR agents want to lay claim to the title of the world’s next high-tech powerhouse. It’s only natural, since the claim itself has the power to attract publicity, investors and customers and become a self-fulfilling prophesy.

Recently, Geektime received a beautiful 63-page report from NASSCOM, India’s IT industry trade organization, making the case that India’s startup scene is on the cusp of a “hyper-growth inflection point.”

Courtesy of NASSCOM

Image Credit: NASSCOM

The report claims that the number of Indian startups is the fourth highest in the world, at over 3,100 startups. India lags behind just three other countries: the United States (with 41, 500 startups), the UK (with 3,500) and Israel (with 3,300).

Furthermore, the report makes the bold prediction that the number of Indian startups will increase to 11,500 by 2020. Many of these will be focused in the adtech, edtech, healthtech and agritech industries.

The huge increase in new startups, claims the report, will happen in part through a NASSCOM initiative called 10,000 Startups. The project will provide incubation, funding and mentorship for 10,000 startups in India over the next 10 years. The project is supported by Google for Entrepreneurs, Microsoft Ventures, Verisign, Kotak and Intel.

Since the project’s launch in April 2013, it has held about 350 events (hackathons, workshops and pitch events) in 22 cities, attended by 25,000 people. These events have been attended by technology leaders including Eric Schmidt, Michael Dell, Vinod Khosla, Sundar Pichai, and Satya Nadella.

During 2010-2014, close to USD $3 billion is expected to be invested in Indian startups, according to the report. The average valuation of India’s startups is USD $2.3 million (compared to $4.2 million in the United States).

The predictions in this report are certainly corroborated by outside sources. India’s technology scene has been described as “ferociously competitive,” and companies like Infosys and Wipro are world class in their industries.

In addition, India has among the world’s highest number of cell phone users and its communications and renewable energy industries are booming. Rajan Anandan, the managing director of Google India, is famously bullish on the country’s prospects.

“By 2020, India will have at least 15 startups that have grown to $1 billion each,” he told the India Times. India’s startup ecosystem has “definitely hit the inflection point,” he said.

courtesy of NASSCOM

Image Credit: NASSCOM

But there is also room for skepticism. Two important reports that rank the world’s startup hubs, Startup Genome’s Startup Ecosystem Report and Bloomberg’s Global Innovation Index don’t rank India anywhere near the top.

Bloomberg’s report, which ranks the world’s “50 most innovative countries,” doesn’t even include India. And Startup Genome’s report, which lists high-tech cities as opposed to countries, ranks Bangalore 19th out of 20.

Also, if you look at Bloomberg and Startup Genome’s lists, the country’s on them tend to have top-notch education systems, a robust democracy, or both.

Meanwhile, India has the world’s highest illiteracy rate. It is home to one in three of the world’s malnourished children. Half of India’s people do not have access to toilets and two-thirds live on $2 a day. India’s high-tech scene tends to concentrate in hubs of prosperity like Bangalore and Hyderabad, but only 2-3 million of the country’s 1.2 billion people are employed in the sector.

According to the NASSCOM report, India is ranked 142nd in the world in ease of doing business. Police regularly stop cars and demand a bribe for motorists to continue. Roads and electricity infrastructure are notoriously shoddy.

No one knows the magic formula that creates a “startup nation.” Bloomberg suggests it has something to do with a country’s education system while others, like Y Combinator co-founder Paul Graham thinks it has to do with a certain intellectual independence and boldness of thinking that is exemplified in U.S. universities, among other places.

In any case, it remains to be seen if India can overcome its cultural and social challenges to become the next startup nation, and perhaps carry the country’s poor and illiterate on high-tech’s coattails. We wish them the best of luck.

Share on:Share
Share on Facebook
Share on Twitter
Share on Google+
Share on Reddit
Share on Email
Simona Weinglass

About Simona Weinglass

I’m an old-school journalist who recently decided to pivot into high-tech. I work in high-tech marketing as well as print and broadcast media covering politics, business culture and everything in between.

More Goodies From Industry

Socially-focused startups tackle rural Mexico’s energy problems

Endless Lima traffic spawns innovative startups

New concept: Booking meeting rooms at the heart of Tel Aviv by the hour