Rethinking the start-up economy

The excitement in the Indian start-up world is overstated. Building a genuine business is hard, and the few get-big-quick stories have had an exaggerated impact upon the imagination. The US Fed started tightening policy from February, and this has impacted risky and illiquid assets worldwide. Exchange-traded equities — worldwide and in India — have been more discerning in judging these firms.

There is a lot of optimism on start-ups. We should not overstate their role. The Indian workforce is about 400 million people. There are perhaps 10,000 start-ups, with an average of 50 employees each keeping half a million employed. Alternatively, the broad market value is about Rs 267 trillion. Each 100 firms at a market value of $1 billion add