With a total of around 27,000 active tech startups and 1,300 active tech startups added in 2022 alone, India continues to be the third-largest tech startup ecosystem in the world.
In the calendar year 2022, India also added the second-highest number of unicorns in the world with 23 Indian startups entering the billion-dollar club. To uncover the core elements of a strong and sustainable startup ecosystem and discuss the foundational steps that can make India the largest tech startup ecosystem in the world, YourStory hosted a panel discussion on – “The Blueprint for a Strong and Sustainable Startup Ecosystem” at the Mumbai edition of TechSparks 2023.
The panel featured experts who have played an integral role in making India the third-largest tech startup ecosystem. It included Neel Bhatia, General Manager – Intel India Technology Pvt. Ltd; Saikiran Appalla, Founder and CEO, Scope; and Amit Kothawade, Assistant Manager – Innovation & Startup, Maharashtra State Innovation Society.
The secret sauce to build a strong and sustainable startup
“Entrepreneurs, you should not see the trends to build a startup. You don’t have to follow trends. You can create the next trend. Trends are important for investors to analyse how they want to invest or where they want to invest. But, entrepreneurs are trendsetters. We create trends, and not follow them,” said Appalla while sharing a message to the aspiring entrepreneurs of the country.
Adding on to that, Bhatia said, “Startups, please do believe in your ideas. Do not keep changing the idea because someone said to you – ‘Do this and I’ll give you the next order’. Be open to evolve it but stay true to your idea. More importantly, do not believe that as a founder, you are everything. Or, as a tech startup founder, do not believe that the technology is everything. To make the business successful, you need the right tech, the right idea, the right business companion and the right strategy in place. Do not worry about funding as more and more funds are running around, chasing the right startup.”
Even though the Indian startup ecosystem is growing at a massive pace, there are concerns about economic downfall and funding winter.
“If you are an innovative startup with a good growth hacker or a GTM strategy, you will get the money. You need not worry about funding winter. There’s plenty of money out there if you have an innovative idea, a good business plan and a good GTM strategy. Funding winter is for those startups that have been burning cash for a long time and they have no road to profitability,” said Appalla.
He added that startups should also know who is the right investor for their business. While choosing an investor, they should also keep in mind how the investor will be able to add value to the startup. But, to find the right investor, young and budding entrepreneurs of India need a platform where all startup ecosystem players are there to guide, help and mentor – indicating the importance of interconnectedness and interdependence of startup ecosystem stakeholders from governments, corporates, academia and investors to entrepreneurs.
The importance of interdependence and interconnectivity in the startup ecosystem
“I started Scope – a networking platform for the stakeholders of the startup ecosystem – at the age of 17. But, before starting Scope, I started another startup at the age of 16, which failed because I was not able to find the right mentor or investors,” said Appalla.
Realising the importance of interconnectivity and interdependence of startup ecosystem stakeholders, Appalla started his venture – Scope, a networking platform where entrepreneurs can connect with investors, mentors and other ecosystem stakeholders who can add value to startups. This invite-only networking platform has around one million users currently and is backed by Gigafund, a venture fund of established entrepreneurs like Elon Musk.
But, since funding is not enough, what else do young entrepreneurs like Appalla need to succeed in their entrepreneurial journey?
“More than the funding aspect or anything else, students want mentorship,” said Appalla while mentioning how the government can support young and aspiring entrepreneurs in India. To not only instil entrepreneurship among students but also to encourage them to take entrepreneurship as a career option, Appalla requested the government to introduce mentorship programs in universities. The government should make mentorship more accessible to students to help them overcome their insecurities and empower them to move ahead with their entrepreneurial ideas.
Along with mentorship, the government and the universities should consider educating students on the financial aspects of a startup. While sharing his personal experience, Appalla said, “When I started my entrepreneurial journey, I did not even know what is a savings account or a current account.”
How Indian Government can boost entrepreneurship in the country?
Educating students along with providing them with mentorship and benefits like tax exemptions or incentives can not only encourage more students to follow their entrepreneurial passion but also help them fund their ideas. Moreover, Appala added that student entrepreneurs would be much benefitted as well as the overall startup ecosystem if all the stakeholders from investors to the government to universities come together and work together.
Adding to the conversation, Bhatia said, “If you look at some of the sectors that really gone vibrant in the recent years – like Fintech – you’ll see that they were backed by the government at the right intervention with the right policies. Similarly, if the government starts looking at the overall scenario and starts saying what are the next sectors where India can experience a boom and intercept that sector early with the right policy framework to nurture that ecosystem, it would boost the overall entrepreneurialism is the country.”
“The government should also promote academia lead innovation to productization. We have a lot of academic institutions like IIT Chennai and IIT Bombay, which have their own incubator cells. But, there is a lot to be done and bring in professor-led innovation translating to a startup,” added Bhatia.
In short, the corporates, the government and the academia should come together to connect the dots so that the whole ecosystem can grow at a scale. From the government perspective, Kothawade informed that the Maharashtra State Innovation Society is already working towards finding a way how all these stakeholders can work together, which they will be announcing by the end of this year.
Talking about the existing policies and startup-focused programs, Kothawade said, “We run a yearly program called Maharashtra Startup Week. Any startup that has any innovation to support the Maharashtra state government can apply for this program. We help 24 startups each year by giving them work orders of Rs. 15 Lacs each. Till date, we have conducted five editions of this program. As a result, 120 startups are already working with close to 33 government departments, and that’s creating a large-scale impact.”
“Due to the government’s tender norms like years of experience and other aspects where the startups don’t fit, it becomes challenging for them to get a work order. But, we have made it easier for startups to take part in government projects with our Maharashtra Startup Week program,” Kothawade added.
Even though Maharashtra has the highest number of registered startups, they are still lagging behind Karnataka in terms of the number of unicorns. To change that scenario, the Maharashtra state government is working on the infrastructure and benefits dedicated to startups. “We are providing startups with MITC-like dedicated zones for startups where they can work and excel, he added.
“Recently, the state government has also launched Maharashtra Virtual Innovation Centre – where early-stage startups can get various services finance, mentorship along with legal advice. We have also launched a Rs. 200 crore dedicated fund for deep-tech startups,” said Kothawade.
Corporates’ role in helping startups grow at scale
The young and budding entrepreneurs of India need mentors from across the industry, and not just one mentor, to learn, grow and excel at scale. While it is important for the government, academia and universities to come together to mentor the upcoming heroes of the Indian startup ecosystem, corporates must come together too, to connect the dots and help them grow at scale.
“We firmly believe that there is no one single company that can say it can nurture a startup end-to-end. If it says so, it is either being naïve or fooling the startup. It’s very important for us to understand that the whole ecosystem must come together to nurture a particular startup. That is where these open innovation platforms and alliances come together,” said Bhatia.
While giving an example of how the whole ecosystem can come together, Bhatia said, “For instance, we at Intel, run a plug-in alliance, which has corporates, investors, industry bodies and startups with solutions that are validated. It gives almost a 360-degree view of the entire ecosystem on a single platform on a sector.”
