Bengaluru startups have raised about $31 billion in the last decade, which is 45 per cent of the total investment into the Indian startup ecosystem. Since 2016, the city has witnessed more capital inflow (about $20 billion) than Delhi and Mumbai combined, according to the Bengaluru Innovation Report 2019 which was unveiled by Karnataka Vision Fund on Tuesday.
With 14 unicorns (44 per cent of unicorns in India) with a cumulative valuation of $61 billion (58 per cent of India), Bengaluru has been the biggest driver of the India startup growth story. A ‘unicorn’ is a startup valued at more than $1 billion. The city is poised to grow even more rapidly with 43 per cent of 'soonicorns' (potential unicorns) in the country being based out of Bengaluru. New emerging sectors like ‘deep tech’ could help the city become a global hub of excellence for certain sectors.
“Bengaluru has served as India's technology capital for over three decades now. With a robust heritage of premier R&D laboratories, academic institutions, and public sector focused firms, Bengaluru was the pivotal city that led to India's IT leadership in the world. These IT companies helped put India on the global map as the software industry permeated every sphere of business,” said Prashanth Prakash, chairman, Startup Vision Group-Karnataka. “Innovations to deliver the best services to clients globally has enabled these IT companies to scale across borders and create value for millions of employees and hundreds of thousands of shareholders. In doing so, they have set a high bar for startups that innovate for global markets out of Bengaluru. These companies helped lay the immovable foundation of tech talent in this city that is now leading the startup revolution in India,” said Prakash, who is also a partner at venture capital firm Accel.
The report which has been prepared by top investment and research firms including Accel Partners and Traxcn Technologies looks closely at the ingredients of what makes the city such a great incubation centre for early-stage ventures. This includes access to both a “tech-savvy early consumer economy” and a quality tech talent pool available from the city’s broader information technology ecosystem. It also evaluates the performance of the ecosystem on a number of parameters including the number of companies founded, average fundraise size and number of unicorns in the city, that firmly cement the city’s place as India’s startup capital.
About 9346 tech startups were launched in the city since 2010, with 5,541 being started in the last three years itself, which is the highest in the country. In terms of scale and maturity, the city is the preferred destination for late-stage investors with about 55 per cent of Series D investments in the country flowing into local startups. The report said that the policy innovations like the world’s first pan-sector regulatory sandbox along with the strong supporting infrastructure will continue to push innovation in the state and provide the right platform for new startups to launch.
“However there should be more intellectual property (IP) and deeper tech ecosystem development as it is still a very small component of the overall ecosystem. The research-based work should not only be available to the companies for solutions in India but it should be monetizable anywhere in the world. A lot of global brands have GICs (global in-house centres) in India and there is a need to improve the ability of startups to connect with them for developing deeper (technologies),” said Prakash. “Also we need more women in the startup ecosystem.”
India's startup subculture is getting stronger by the year, with India being home to the third-largest startup ecosystem in the world. Indian startups have raised close to $50 billion in just the last six years, with more than 40,000 startups launched in the country. Immense value has been constructed in this ecosystem already - with over 30 unicorns, this is also the third-largest unicorn concentration worldwide. “Growth has accompanied a remarkable cultural shift in India, with more young and ambitious entrepreneurs finding social and financial support to grow large businesses and aim for outlier results, said Prakash.