One of the most historic moments for Indian startups was when PM Narendra Modi declared January 16 as the National Startups Day
The launch of ONDC, 5G, and CBDCs has put India on the global radar
The Indian startup economy crossed a major milestone after it added the 100th Indian startup to the unicorn club in 2022
From just 400 registered startups in 2014 to 85K in 2022, India’s startup ecosystem has grown exponentially. In less than a decade, the country’s startup space is seen enjoying the third spot globally after China and the US. Experts say that the fundamentals of this burgeoning space are so strong that even the Covid-19-induced market slump ended up favouring it.
It is pertinent to note here that until 2019, the country’s startup ecosystem was moving at a pace just enough to sustain a top spot. Then came 2020, the year of the pandemic, and, surprisingly, the ecosystem leapfrogged from basic survival to sustainability on the back of a more digitally involved nation. Subsequently, the year 2021 saw an influx of funds to the tune of $42 Bn and the creation of 44 unicorns. India, which today is home to 108 unicorns, was already on a growth trajectory never seen before.Download Annual Funding Report 2022
However, amid much gloom and doom of 2022, which was largely marred by macroeconomic headwinds and the funding winter, it should not be forgotten that the PM’s dream of seeing the nation become the largest startup ecosystem in the world has remained largely unimpacted.
To substantiate our claims, we have compiled a total of 10 key accomplishments made by India in 2022, with a focus on its startup ecosystem.
India Gets Its National Startup Day
Commemorating the sixth anniversary of the Startup India Action Plan, the government on January 15, 2022, declared January 16 as the National Startup Day. It was a historic moment for India and was touted to be the beginning of the golden age for the country’s startup ecosystem.
The government’s flagship initiative, Startup India, was first announced On January 16, 2016, to give a much-needed boost to the country’s startup culture and build a strong and inclusive ecosystem that is synonymous with innovation, growth and entrepreneurship.
As of March 30, 2022, under the Fund of Funds scheme for startups, INR 9,408 Cr has been allocated to 582 startups by AIFs under FFS. Further, more than 84K entities have been recognised as startups from across the country by the Department for Promotion of Industry and Internal Trade (DPIIT) this year.
The Launch Of India’s First Privately Built Rocket
On November 18, 2022, India took another major leap with the launch of its first privately built rocket into space. At the centre of this historical development was an Indian startup, Skyroot Aerospace.
Hyderabad-based Skyroot was founded in 2018 by Naga Bharath Daka and Pawan Kumar Chandana. It is a Series B stage funded startup and has raised $67.3 Mn to date. The startup successfully launched its Vikram-S rocket from Satish Dhawan Space Centre in Sriharikota, Andhra Pradesh.
Further, within a week of the Skyroot launch, spacetech startups Pixxel and Dhruva Space sent their payloads on the space agency Indian Space Research Organisation’s (ISRO) workhorse, the Polar Satellite Launch Vehicle (PSLV). On June 1, Bengaluru-based Digantara Aerospace and Hyderabad-based Dhruva Space successfully launched their payloads from the iconic Satish Dhawan Space Centre (SDSC).
Indian Government Launches ONDC To Promote Ecommerce
The Open Network for Digital Commerce (ONDC) started with its pilot phase in April 2022. This first-of-its-kind initiative has been promoted as the United Payments Interface (UPI) moment for India’s ecommerce space.
ONDC is expected to put around 8 Mn small and mid-size retailers on an even footing with the likes of Amazon India and Walmart-owned Flipkart, which control more than 60% of the country’s online retail market.
Sponsored by DPIIT, the non-profit initiative will bring together all stakeholders – buyers, sellers, logistics players, and digital payment providers – on one platform for convenience and growth. This will help create a level playing field for businesses and drive open commerce, similar to how UPI has democratised digital payments.
ONDC aims to generate 3 Bn orders per month, bring 15 Bn neighbourhood shops online, sign up 900 Mn digital buyers, and reach a gross merchandise value (GMV) of $48 Bn over the next five years.
The beta testing of the platform was conducted in Bengaluru in September this year. The pilot project is currently live in 2 cities, including Bengaluru and Meerut.
India’s Own Digital Currency Is Born
On February 1, 2022, India’s Finance Minister Nirmala Sitharaman announced the Central Bank Digital Currency (CBDC) project. Following this, the Reserve Bank of India commenced the central bank digital currency (CBDC) pilot on November 1, 2022, which saw G-Sec trades worth INR 275 Cr on the first day. The first pilot of the digital rupee for the retail segment was launched on December 1, 2022.
With this launch, the RBI joined the list of central banks with their own digital currency. Out of 112 countries that think tank Atlantic Council tracks for CBDC developments, 11 countries have launched their CBDCs, while 15 countries have launched their CBDCs in pilot mode.
Citizens Welcome 5G
In October 2022, PM Narendra Modi officially launched 5G services in India. Bharti Airtel became the first telecom company to roll out the service in eight cities of the country.
The next-gen mobile network will be rolled out in a phased manner. In the first phase, 13 cities will get access to the services. These cities include Ahmedabad, Bengaluru, Chandigarh, Chennai, Delhi, Gandhinagar, Gurugram, Hyderabad, Jamnagar, Kolkata, Lucknow, Mumbai and Pune.
India’s first-ever 5G spectrum auction ended on August 1, 2022, with 40 rounds of bidding across seven days. Reliance Jio, Bharti Airtel, Vodafone Idea (Vi), and Adani Data Networks, a subsidiary of the Adani Group, bid for the spectrum worth INR 1.50 Lakh Cr.
UPI Spreads Its Wings
The government has been putting a lot of effort into expanding the network of the country’s digital payment systems such as RuPay and UPI. In 2022, Europe became the latest region to accept India’s payment systems. Other countries that have embraced different forms of Indian payment systems include France, UAE, Saudi Arabia, Bahrain, Singapore, Maldives, Bhutan, and Oman.
Outside India, while Nepal was the first to leverage UPI as a payment platform, Bhutan led the adoption of India’s UPI standards for its quick response (QR) code. It is also the second country after Singapore to have BHIM-UPI acceptance at merchant locations.
India Holds G20 Presidency
Enjoying the G20 Presidency since December, 2022, India will convene the G20 Leaders’ Summit in 2023 for the first time. During its G20 presidency, India will focus on Digital India and Startups.
Further, with its Startup-20 Engagement Group initiative, India aspires to create a global narrative for supporting startups and enabling synergies between startups, corporates, investors, innovation agencies and other key stakeholders.
While every country falling in the list of G20 nations will be building its startup ecosystem internally, this group will work together to enable startup financing models and bring coherence and co-creation, especially for the sectors of global importance.
Home To The Third-Largest Unicorn Club Of The World
The Indian startup economy crossed a major milestone after it added the 100th Indian startup to its unicorn club in 2022. In May 2022, neobanking startup Open raised $50 Mn to claim the position of India’s 100th unicorn. The country’s billion dollar club now stands tall at 108 unicorns, third largest after the US (806) and China (217).
In total, India added 21 unicorns in 2022. Although this is approximately 50% of the 44 unicorns added to the club in 2021, considering the economic slowdown and the funding winter, continuing the unicorn spree and maintaining the top spot globally is a big achievement in itself.
The 21 unicorns raised a total funding of $6.2 Bn in 2022. These companies took an average of nine years to become unicorns.
Now, let’s take a quick look at the unicorns added in 2022:
The Year Of M&As
Growing mergers and acquisitions in a startup economy indicates signs of maturity. As startups are able to find exits, investors’ interest, along with investments, in the sector grows. In 2022, the Indian startup ecosystem recorded 240 merger and acquisition deals, 9% higher than 210 such deals in 2021 and 179% higher than 82 deals in 2020.
According to an Inc42 survey, the startup M&A wave in 2022 is largely driven by late-stage startups looking to consolidate their market share or expand into new verticals.
The enterprisetech sector saw the highest number of acquisitions in 2022. The sector reported 51 mergers and acquisitions during the year, accounting for 22% of the total M&A deals in 2022.
The enterprisetech sector was closely followed by ecommerce at 49 deals, edtech at 31 deals, and fintech at 22 M&A deals.
The Year Of Policies & Regulations
In 2022, we saw the Indian government, along with its statutory bodies, take significant steps to ensure a strengthened regulatory startup ecosystem in the country.
A plethora of rules, regulations and policies came into effect during the year, while many were announced with indications to put them in play in 2023. At the same time, the Indian government took a number of initiatives to boost the startup ecosystem.
Here’s a list of key policy and regulatory announcements, which impacted the startup ecosystem in 2022.
2023: The Golden Year For Startups
India@80 is one of the crucial visions for the Indian government. It is expected that access to primary education, healthcare, and water are some of the short-term challenges that the country is aiming to resolve in the next five years. This is where Indian startups have a key role to play. Further, with India leading the G20 presidency, 2023 is seen as the golden year for startups.
In 2023, industry experts anticipate more Indian startups crossing the international borders and securing foreign direct investments. As the Indian startup economy is facing the chills of the funding winter, experts see more innovative business models emerging next year.
While the government is expected to focus on creating regulatory policies for the country’s startup space in 2023, Indian startups are expected to work towards achieving financial stability, attaining better product-market fit, and building Make In India products in line with the nation’s sustainable goals.Download Annual Funding Report 2022