Indian startups are seeing unprecedented success with a record $11.3bn raised this year representing the largest sum of money ever to flow into the ecosystem. Back in 2016 tech startups were only able to raise $4.3billion which was $3.6b down from the previous year.
Now the flow of capital has started to increase again and has gone beyond expectations.
Most venture capital has been attracted to customer-facing startups this year which have raised funds to the tune of $8.2 billion. The other two big gains have been seen in retail with $2.3 billion and enterprise services, with $1.5 billion.
India's startups are becoming more popular with investors as the ecosystem matures. Back in 2014/15 the startups were looking at e-commerce solutions and often building on existing ideas but now they are looking at new areas and building innovative solutions in their own right.
Recent changes are partly due to government tax incentives and the efforts of Mukesh Ambani. Ambani, who launched the telecom provider Reliance Jio 3 years ago, has boosted tech startups with his low-cost data offering that has allowed millions more Indians to access the internet.
A cash crunch in 2016 has also lent momentum to demand in tech particularly in financial services like mobile wallets which have boomed in India in the last 2 years. Paytm now has over 2 million users in India with Google Pay claiming more than 67 million customers.
Startups are becoming more popular in India and around 70% of founders that reach a Series A financing round have worked for a startup before. This is almost double the amount in 2014, and 7 times the amount in 2010.
Other encouraging signs are that 17.3% of the 150 Indian startups that have raised capital to June 2019 were led or co-led by women. Last year this figure was only 10%.
Funds are concentrated into a smaller number of startups with 872 taking part in financing rounds this year; a fall from 924 in 2018 and 1,141 the previous year. However, these numbers are likely to change and it also seems clear that the total fundraising will increase by the end of the year.
A decade ago India had a very small startup economy and it was extremely difficult to raise money. It seems that in a short space of time there has been a significant turnaround.