Inc42’s Annual Indian Tech Startup Funding Report 2019

2019 A N N U A L R E P O R T
P R E S E N T I N G P A R T N E R
Funding
Report
Indian Tech Startup

Contents
Table of
Scope Of The Report
Executive Summary
Introduction To The Report
Indian Startup Funding Landscape
Stage Analysis
Business Model Breakdown
Sectorwise Analysis
Demography: Top Startup Hubs Of India
Investor Participation Analysis & The Top 10 VCs
Mergers And Acquisitions
India As A Startup Hub: A Comparison
Market Parameters
Economic Parameters
Economic Indexes
Transactional Volume
Trade Inflow Outflow & FDI Trends
Impact Of Indian Startup Economy: An Analysis
Impact On Jobs
Emerging Technologies
The Government Intervention & Policies
Growth In Per-Capita Income & Diaspora
Gender Analysis
Funds Launched in 2019
Roadblocks For Indian Startup Ecosystem
Indian Startup Funding Predictions 2020 & 2021
Methodology
Glossary
Bibliography
01
02
04
05-107
108-116
117-131
132
135
139
145
146
147

Scope
Of The Report
The startup funding landscape in Indian startup ecosystem
has changed significantly over the past few years. In the
past decade, the Indian startup economy observed the
adverse effect of the funding bubble of 2016 to the funding
crunch of 2018 (40% drop in seed stage deals). However,
the startup economy has undergone a revival in 2019.
In this edition of DataLabs by Inc42’s flagship report —
“Annual Tech Startup Funding Report 2019”, we analyse
the health of our Indian startup ecosystem from the lens of
funding. The rise and fall of funding has a significant role in
shaping startups, so this is a key indicator about the state of
the ecosystem. Funding enables business to build, grow
and scale to be able to generate revenue and capital gain
for its stakeholders. This in turn boosts employment and
contributes to the GDP of the country, which is why
investments are an integral part of any tech ecosystem,
particularly startups.
The report will provide readers with an in-depth analysis of
the funding landscape of India in 2019 and what can be
expected for 2020 and 2021. Among other aspects of the
ecosystem, the report will present:
Funding trends and projections
Opportunities created for startups in 2019
Funding analysis and trends in startup hubs and sectors
Analysis of rising sectors
Impact of funding on the Indian economy
Investor outlook and intent
Top investors in India
Government policies and their impact
Comparison of India with global startup hubs
Emerging tech for 2020
Challenges and opportunities for next decade
1
©Inc42Media|notfordistribution

Summary
Executive
$12.7 BnFunding raised Indian startups across 766 deals
22%Share of 2019 to the total funding amount invested in Indian
startups in the last 5 years
34Deals over $100 Mn in Indian startups
B2CBecame the most preferred business model by Indian investors
Fintech & EcommerceBagged most funding in 2019
20%
Contribution of top 5 VCs in the total deal count
2

Sequoia CapitalDethroned Accel Partners to become the most active VC of
2019
9%Startups funded in 2019 had women founders
111M&A Deals were recorded, a 10% fall compared to 2018
7Startups entered the unicorn club
3

Introduction
To The Report
The last few years of the past decade showed that India has
great appetite for technology, data and the internet. From
having a handful of tech companies to hundreds and then
thousands of innovative new ventures, India’s startup
ecosystem has grown immensely over the past decade and is
on the verge of reaching a new level of maturity.
From 29K startups in 2014, the numbers grew exponentially
from 2015 to 2018 and touched 49K. In less than half a
decade (2014-2019) startups and the enabling ecosystem
have flourished with the support of the government’s
ambitious Startup India, Make in India and Digital India
programmes.
Thanks to this favourable environment, Indian startups have
created a combined value of about $130 Bn with overall
funding skyrocketing to touch $58 Bn from 2015-2019.
Moreover, apps developed by Indian companies surpassed
their Chinese counterparts in terms of downloads in 2019 —
41% of the top 200 apps downloaded in 2019 were made by
Indian developers — which is another sign of the market
maturing.
The last five years hold a series of historic milestones for the
Indian startup economy. From a funding standpoint, the
ecosystem has grown immensely with over 5,011 deals by
2,984 startups. With $12.7 Bn funding in 2019 and 766 deals,
Indian startup ecosystem saw the entry of seven startups into
the unicorn club.
However, the preference of late-stage investments rather
than risking capital in seed or early-stage startups is growing,
which indicates that over the years Indian startup investors
are turning more and more risk-averse. This is likely to hamper
the growth of innovation in the ecosystem in the long run.
Like in the past, sectors such as enterprise tech, ecommerce,
fintech, consumer services and healthtech banked the most
funding. These five sectors combined accounted for 63%
(3,177) of the total deal count in Indian startup ecosystem
between 2014 and 2019.
India’s tech capital, Bengaluru, continued to lead the hubwise
funding charts with a total investment of $5.3 Bn.
4

Indian
Startup
Funding Landscape
5

$12.7 Bn
The total funding raised by Indian
startups across 766 deals
$21 MnAverage ticket size of funding
amount
5%
664
Drop in count of unique
startups funded compared
to 2018
Unique startups funded
Paytm UdaanRenew Power Ola Delhivery
15%Surge in total funding amount
compared to 2018
Top Funding Grossers Of 2019
6

Year
FundingAmount
DealCount
Startup funding amount grew by 15%, while deals plunged 8% in 2019
Startup Funding Trends
$0 Bn
$10 Bn
$15 Bn
$5 Bn
0
250
500
750
1000
1250
Funding Amount Deal Count
2014 2015 2016 2017 2018 2019
Indian Startup
Funding Overview
7

Year
FundingAmount
Without the outlier funding rounds, the total amount raised stood at $9 Bn,
the highest in the past five years
Outliers Take Over A Quarter Of The Total Funding
0
250
500
750
1000
1250
2014 2015 2016 2017 2018 2019
DealCount
$0.0 Bn
$2.5 Bn
$5.0 Bn
$7.5 Bn
$10.0 Bn
Year
UniqueStartupsFunded
0
250
500
750
1000
2014 2015 2016 2017 2018 2019
The count of unique startups funded fell for the third straight year as investors
backed growth and late stage startups
Lowest Number Of Indian Startups Funding In
Past 5 Years
8

Key Trends Observed
The transition of the Indian startup
ecosystem from the growth stage to
maturity is quite evident from the fact
that trends of both funding amount and
deal count have stabilised from 2017 to
2019.
The count of unique startups funded
declined by 5% in 2019 compared to
the previous year. The investor
preference of backing existing startups
over new ventures has been the primary
factor behind this drop, over the years.
The negative growth rate in deal count
of 6% indicates the slowdown in the
frequency of deals in the ecosystem.
Due to the increased failure rate of
startups over the years, investors have
become more risk averse in terms of
funding startups. As a result a preference
towards the rising popularity of
syndication over individual venture
capital investments is a primary reason
behind the downward trend in the deal
count.
Without outliers, the value of funding
amount recorded a historical peak ($9
Bn) in 2019. While in 2018, the
percentage share of outliers in total
funding was 36%, in 2019, the share
stood at 27%.
Median Funding Amount &
Average Ticket Size
Median Funding Amount (W/O)Median Funding Amount
Year
MedianFundingAmount
2014 2015 2016 2017 2018 2019
With a CAGR of 36%, median funding amount created new benchmark in 2019
Median Funding Amount Hits A New High
$0 Mn
$1 Mn
$2 Mn
$3 Mn
$4 Mn
9

Key Trends Observed
Median funding amount and average ticket
size recorded historical peaks in 2019. The
median funding amount and the average
ticket size stood at $4 Mn and $20 Mn
respectively.
38% and 19% CAGR of median funding
amount and average ticket size between
2015 to 2019.
The median funding amount and average
ticket size recorded 2x and 15% surge
compared to the previous year.
The growing popularity of late stage
investments over seed and growth is the
primary reason behind the soaring value of
funding ticket size.
Average ticket size (W/O)Average ticket size
Year
AverageTicketSize
2014 2015 2016 2017 2018 2019
The spike in late stage investments helped Indian startups grow average ticket
size to $21 Mn, a 15% jump from 2018
Late Stage Deals Benefit Average Ticket Size
$0 Mn
$5 Mn
$10 Mn
$15 Mn
$20 Mn
$25 Mn
10

Stagewise
Analysis
11

Funding Amount
With the fall in seed funding, Indian investors scouted for bridge and growth
stage investments, leading to a 30% and 12% hike respectively for the two stages
Bridge & Growth Funding Amount Record Growth
Bridge Stage Growth Stage Late Stage Seed Stage
Year
2014
2015
2016
2017
2018
2019
0% 25% 50% 75% 100%
India's seed-stage startups struggled to attract investors for the third year in a
row since 2016
Seed Funding Crunch Intensifies
Deal count
Year
2014
2015
2016
2017
2018
2019
0% 25% 50% 75% 100%
12

Seed Stage
288Unique startups funded at
seed stage, 17% lower
compared to 345 in 2018
44%Decline in total seed stage
funding amount compared
to 2018
-15%CAGR of count of unique
startups funded at seed
stage between 2015 to
2019
$763KMedian funding amount for
seed stage
*Based on Indian startup
funding data for 2019
13

5 Point Summary: Seed Stage
2 0 1 92 0 1 7 2 0 1 82 0 1 62 0 1 52 0 1 4
Min
$8K
$2 Mn
$240KQ1
$496KMedian
$763KMedian
$235KQ1
$108KQ3
$1.6MnQ3
$7.5 Mn
$10K
$8.2 Mn
$7.3K
$5.6 Mn
$4K
$1.4K
$65.8 Mn
$25 Mn
$782KQ3
$389KMedian
$153KQ1
$16K
$766KQ3
$376KMedian
$147KQ1
$750KQ3
$360KMedian
$160KQ1
Q1 $148K
$224K
$726K
Median
Q3
Max
14

Year
FundingAmount
With just $252 Mn in funding, India’s seed funding startups recorded 19% and
44% decline in deals and amount respectively in 2019 compared to 2018
Seed Funding’s Third Straight Drop
2014 2015 2016 2017 2018 2019
DealCount
$0 Mn
$100 Mn
$200 Mn
$300 Mn
$400 Mn
$500 Mn
0
200
400
600
800
Year
CountOfUniqueStartupsFunded
0
400
600
200
800
2014 2015 2016 2017 2018 2019
Compared to 345 startups funded in 2018, 2019 saw 17% decline with
288 startups getting funded
Fewer Startups Funded At Seed Stage
15

Year
DealCountAtSeedStage/TotalDealCount
2014 2015 2016 2017 2018 2019
The seed stage deals had 40% share in total deals in 2019, compared to
46% in 2018
Seed Stage Share In Total Deals Declined In 2019
0%
20%
40%
60%
80%
Key Trends Observed
Seed funding in the Indian startup ecosystem
is showing signs of a slowdown. This can be
ascertained by looking at the growth rate of
three primary indicators— funding amount,
deal count and count of unique startups
funded.
Both, the count of funding deals and startups
funded are diminishing rate of 15% (2015-
2019) whereas the funding amount recorded
a minimal CAGR of 1% in this time.
The shift in investor preference towards late-
stage investments over seed stage can be
attributed to the high failure rate of startups
and wider syndication opportunities for
startup investments.
Hubwise, Delhi NCR and Bengaluru recorded
the most number of seed funding deals.
Enterprise tech and ecommerce recorded
the most seed funding deals.
The share of seed deals in total deals
declined in 2019. While, the median amount
stood at $502K compared to $491K in 2018;
the percentage share of seed funding in total
deals was 6% lower than 2018.
16

Bridge Stage
67Unique startups were
funded in bridge funding in
2019, a 22% spike
compared to 2018
68%Surge recorded in total
funding amount at bridge
stage in 2019 compared to
2018
12%CAGR of count of unique
startups funded between
2015 to 2019
$1.3 MnMedian funding amount in
2019 at bridge stage
Year
FundingAmount
Bridge funding amount and deal count grew at a CAGR of 30% & 12%
respectively during 2015-2019
Bridge Funding Amount Record Historical Jump
Source: Indian Tech Startup Funding Report 2019
© 2020, Inc42 Media
0
25
50
75
100
125
2014 2015 2016 2017 2018 2019
DealCount
$0 Mn
$25 Mn
$50 Mn
$75 Mn
$100 Mn
17

Year
BridgeFundingToTotalDealCountRatio
2014 2015 2016 2017 2018 2019
After falling in 2015 and 2017, bridge funding has been picking pace since 2018
in terms of contribution to total deals
After 2017 Decline, Bridge Funding Contribution
Record Hump
0%
10%
20%
30%
40%
Year
2014 2015 2016 2017 2018 2019
Compared to 55 startups funded in 2018, 67 startups secured bridge funding in 2019
Unique Startups Funded Records Surge
0
25
50
75
125
100
18

Key Trends Observed
As per DataLabs analysis, 97% of the bridge
funding deals are recorded at Pre-Series A.
While the rest 3% are recorded at Pre-Series
B and C stage.
All three indicators — funding amount, deal
count and number of unique startups funded
— have recorded a positive growth rate of
30%, 12% and 12% respectively.
As per historic data (2015-2019), maximum
bridge funding deals were recorded in
sectors like enterprise tech, consumer
services. While sectors like adtech, agritech
had very few deals.
The need for scaling up the business
operations is the primary factor for the
growth of bridge funding in the country.
19

Growth Stage
234
Unique startups were
funded at the growth stage
in 2019, a 2% higher
compared to 2018
62%
Surge recorded in growth
stage funding amount in
2019 compared to 2018
-1%
CAGR of count of unique
startups funded at growth
stage between 2015 to
2019
$7 Mn
Median funding amount at
growth stage in 2019
20

2 0 1 8 2 0 1 92 0 1 72 0 1 62 0 1 52 0 1 4
Min
$30K
$143 Mn
$100 Mn
$50K $70K
$180 Mn
$352K
$500 Mn
$127K
$311 Mn
$289 Mn
$500K
Max
Q1
$2.5Mn
Q1
$3.7Mn
$6Mn$14.2Mn
Median
$7Mn
Median
$15.8Mn
Q3
Q3
Q1
$2.4Mn$5.9Mn$13Mn
MedianQ3
Q1
$1.8Mn$5.1Mn$15.5Mn
MedianQ3
Q1
$3Mn$7.7Mn$16Mn
MedianQ3
Q1
$2.2Mn$4.8Mn$12Mn
MedianQ3
5 Point Summary: Growth Stage
21

Year
2014 2015 2016 2017 2018 2019
Despite the huge growth in funding amount, the number unique startups funded
at growth stage grew only by 2% compared to the previous year
Unique Startups Funded Stagnant
0
50
100
150
200
250
Year
FundingAmount
DealCount
At $4 Bn, growth stage funding amount recorded a 62% spike in 2019 compared to 2018
Growth Stage Funding Grew Exponentially
0
100
200
300
2014 2015 2016 2017 2018 2019
$0 Bn
$1 Bn
$2 Bn
$3 Bn
$4 Bn
$5 Bn
22

Year
GrowthToTotalDealCountRatio
2014 2015 2016 2017 2018 2019
Growth stage carved a greater share in total deals with 34% in 2019, much higher
than the 28% average annual share in total deals from 2014-2019
Growth Stage Contribution On The Rise
0%
10%
20%
30%
40%
Key Trends Observed
The growth stage investments which
consists of Series A and Series B rounds of
funding witnessed a major uptick in the
growth of funding amount.
Sectors like fintech, enterprise tech recorded
most deals at the growth stage with 40%
share in total deals recorded in growth stage.
Overall, there is a minor slowdown in the
deal count and unique startups funded as
indicated in CAGR between 2015 to 2019,
-2% and -1% respectively.
Total funding amount of growth stage
startups reached its historical peak $4 Bn in
2019, which is a surge of approximately 2x
compared to the $2.6 Bn in 2018. On the
other hand deal count witnessed a minor
setback of 3%.
Mature hubs like Bengaluru, Delhi NCR with
105 and 64 deals respectively stood at the
top in terms of growth-stage funding.
23

Late Stage
98Unique startups were
funded at the late stage in
2019
7%Decline in total funding
amount in 2019 compared
to 2018
11%CAGR of count of unique
startups funded between
2015 to 2019
$30 MnMedian funding amount for
late stage in 2019
24

5 Point Summary: Late Stage
2 0 1 8 2 0 1 92 0 1 72 0 1 62 0 1 52 0 1 4
Min
$1 Mn
$1000 Mn
$701 Mn
$253K
$216K
$300 Mn
$1 Mn
$1500 Mn
$1 Mn
$1000 Mn
$669 Mn
$401K
Max
Q1
$11.7Mn
Median
$23Mn
Median
$31Mn
Median
$39.2Mn
Median
$32Mn
Median
$24.7Mn
Median
$21.55Mn
Q1
$15Mn
Q1
$14.2Mn
Q1
$13.7Mn
Q1
$9.8Mn
Q1
$10Mn
Q3
$75Mn
Q3
$90Mn
Q3
$72Mn
Q3
$100Mn
Q3
$103Mn
Q3
$70Mn
25

While the funding amount fell for the second year in a row, the deals grew by 6%
compared to 2018
Late Stage Deals Reached Historical Peak
Year
FundingAmount
DealCount
2014 2015 2016 2017 2018 2019
0
50
100
150
$0.0 Bn
$2.5 Bn
$5.0 Bn
$7.5 Bn
$10.0 Bn
$12.5 Bn
Year
2014 2015 2016 2017 2018 2019
The late stage startups reported an 11% CAGR between 2015 to 2019
Unique Startups Funded At Growth Stage
Remained Stagnant
0
25
50
75
100
26

Key Trends Observed
In contrast to seed and growth stage all three
major indicators of the startup economy —
funding amount, deal count and unique
startups funded have recorded a positive
growth rate between 2015 to 2019, 6%, 14%
and 11% respectively.
Fintech, consumer services recorded the
most number of deals, while ecommerce
and fintech had the most funding amount in
2019 at the late stage.
Top 5 startups had a 23% share in total
funding amount at the late stage.
The preference of late stage investments
over seed and early can be linked to the fact
that late stage investments in established
startups is relatively safer compared to
investment in new and emerging ventures.
Fintech recorded the most number of deals
by sector at the late stage.
Year
LateStageToTotalDealCountRatio
2014 2015 2016 2017 2018 2019
On an average, the late stage deals have 12% contribution in the total deals,
but the same was at 17% in 2019
Late Stage Contribution To Total Deals Grows
0%
5%
10%
15%
20%
27

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Business Model
Breakdown
29

Year
FundingAmount
In 2019, the funding in B2B-B2C startups stood lowest in the last six year
B2B-B2C Startups Face Funding Crunch
B2B B2B-B2C B2C
0%
25%
50%
75%
100%
2014 2015 2016 2017 2018 2019
Year
DealCount
With 23% rise, B2C startups recorded high jump in funding deals whereas B2B and
B2B-B2C startups recorded 2% and 44% lower funding compared to 2018
B2C Startups Reported Maximum Deals
B2B B2B-B2C B2C
0%
25%
50%
75%
100%
2014 2015 2016 2017 2018 2019
30

With largest share in deals (425) and amount ($6.23 Bn), B2C startups recorded
a high jump in funding in 2019
B2C Startups Rocked The Funding Charts In 2019
B2B
23.1%
B2B-B2C
27.8%
B2C
49.0%
With largest share in deals (425) and amount ($6.23 Bn), B2C startups recorded
a high jump in funding in 2019
Business Model Wise Split Of Total Deal Count
B2B
20.6%
B2B-B2C
23.9%
B2C
55.5%
31

Key Trends Observed
B2B startups recorded the highest CAGR i.e.
21% in the funding amount between 2015-
2019.
Enterprise tech, Consumer services and
Fintech startups recorded maximum deals in
B2B, B2C & B2B-B2C business models.
Across all the business models B2B, B2B-
B2C and B2C Bengaluru based startups
recorded the maximum number of deals in
2019.
A 29% surge in the unique startups funded
was recorded in 2019 compared to 2018.
B2C the most preferred business model in
2019, increased addressable market for
consumer internet products due to wider
penetration of internet and smartphone
among the Indian population is the reason
behind the increased investor confidence
towards B2C startups.
The median funding amount amongst B2B
and B2B-B2C startups stood at $4 Mn.
32

Sectorwise
Analysis
33

LogisticsHad the highest median funding
amount ($22 Mn) in 2019
FintechEmerged as the most
preferred startup sector of
2019
EcommerceRecorded maximum funding amount in 2019
50%Contribution of ecommerce,
fintech and transport tech to
the total funding in 2019
Year
FundingAmount
With just $993 Mn in funding, the contribution of consumer services to the
total funding dropped by 12% in 2019, compared to 20% contribution in 2018
Funding In Consumer Services Faces Decline
2014
2015
2016
2017
2018
2019
0% 25% 50% 75% 100%
Ecommerce Fintech Consumer Services Transport Tech
Enterprise Tech Others
34

How The Top 5 Sectors Stack Up
Against Each Other
Top5(2014-2019)
Fintech
Enterprise Tech
Ecommerce
Consumer Services
Healthtech
Enterprise Tech
Ecommerce
FinTech
Consumer Services
Healthtech
Top5(2014-2018)
Year
DealCount
Enterprise tech, ecommerce and fintech recorded a total of 2,134 deals to
make 43% of the deal count
Top 3 Sectors Had 43% Share In Total Deals
2014
2015
2016
2017
2018
2019
0% 25% 50% 75% 100%
Enterprise Tech Ecommerce Fintech Consumer Services
Healthtech Others
35

The popularity of fintech, enterprise tech and ecommerce among investors remained intact throughout the year.
Funding amount
Sectors
Ecommerce and fintech together bagged $5.2 Bn funding. While the next top
three sectors just have 26% share in the total funding
Top Two Sectors Secured 41% Of The Total Funding
Ecommerce
Fintech
Transport Tech
Enterprise Tech
Consumer Services
Logistics
Media and
Entertainment
Healthtech
Edtech
Others
$0 $1 Bn $2 Bn $3 Bn
36

With 125 deals & 106 unique startups funded, fintech became the
undisputed leader in 2019
Fintech Emerged As The Top Funded Sector
Deal count
Sectors
Fintech
Enterprise Tech
Ecommerce
Consumer
Services
Healthtech
Media and
Entertainment
Edtech
Deeptech
Real Estate Tech
0 25 50 75 100 125
Deal CountUnique Startups Funded
125
106
114
105
93
80
75
61
62
52
57
52
46
43
43
42
34
28
30
21
87
74
Transport Tech
Others
37

Key Trends Observed
In the context of funding amount between
2014 and 2019, ecommerce continues to
remain at the top by the end of 2019. The
growing investor confidence towards sub
sectors such as vertical ecommerce and
private label is a major reason behind the
growing volume of capital inflow in the
sector.
Fintech, on the other hand, jumped one spot
above in the ranking table to become the
second most funded sector. In 2018 it was in
third place in terms of value of funding
amount. Growth in investments into lending
tech startups due to the wider market
opportunity fuelled the growth of high-ticket
investments in this sector.
Consumer services slipped one spot in the
ranking from 2018 to third spot in 2019. The
capital inflow in this sector has become
highly skewed towards startups in the late
stage. The high operational costs and lower
profit margins in this sector can be linked to
decline in venture capital interest in the
sector.
Transport Tech sector has usurped travel
tech from the third spot in 2019. The growing
investor confidence towards the electric
mobility startups has played a crucial role in
the surge in capital inflow towards this
sector. The government’s push toward EVs
has also been a major catalyst.
Enterprisetech retains the fifth spot, with a
surge in demand for digitalisation of business
operations and transactions in the country
opening up new business opportunities. In
addition to this, a greater probability of M&As
in the enterprise tech sector over others is
also a driving factor behind the growth of
enterprise tech funding in India.
38

Freshworks IcertisDruva Zenoti Clevertap
Five Year Performance
105
$1.2 Bn
Total funding secured by startups in 2019
across 114 deals
15%
CAGR of funding amount
between 2015-2019
Bengaluru$2 Mn
Emerged as the top startup hub with 46 dealsThe median funding amount in
2019
$3.8 Bn 804
Funding Amount Deals
Enterprise Tech
39

Year
FundingAmount
DealCount
While the deal contribution witnessed a slight growth, the funding amount
contribution saw 2% hike, taking total contribution to 9% compared to 7% in 2018
Enterprise Tech Record 49% Hike In Funding
Amount
0
50
100
150
200
2014 2015 2016 2017 2018 2019
$0 Mn
$250 Mn
$500 Mn
$750 Mn
$1000 Mn
$1250 Mn
Deal countFunding amount
Year
2014 2015 2016 2017 2018 2019
While the deal contribution witnessed a slight growth, the funding amount contribution
saw 2% hike, taking total contribution to 9% compared to 7% in 2018
Enterprise Tech's Contribution To Total Funding
Record Jump
0%
5%
10%
15%
20%
25%
%ShareOfTheTotal
40

Year
MedianFundingAmount
$0.0 Mn
2014 2015 2016 2017 2018 2019
With $12 Mn as the average ticket size, a 40% higher compared to 2018,
enterprise tech funding saw exponential growth
Average Ticket Size Reaches All-Time High
$1.0 Mn
$1.5 Mn
$0.5 Mn
$2.0 Mn
Year
AverageTicketSize
$0.0 Mn
$5.0 Mn
$7.5 Mn
$2.5 Mn
$12.5 Mn
$10.0 Mn
2014 2015 2016 2017 2018 2019
With $12 Mn as the average ticket size, a 40% higher compared to 2018,
enterprise tech funding saw exponential rise
Average Ticket Size Stood All Time High In 2019
41

Key Trends Observed
The enterprise tech sector which consists of
a wide array of sub sectors such as SaaS
(software as a service), HRTech (human
resource technology), marketing automation
etc. recorded a total funding of $1.15 Bn
across 114 deals in 2019. The compounded
annual growth rate of funding amount and
deal count in this sector between 2015 to
2019 was 15% and -12%.
Proactive push of the government towards
digitalisation of Indian economy, growing
digital presence of business and wider M&A
opportunity in this sector are the catalyst
fueling the growth of enterprise sector in
India.
Similar to the overall startup ecosystem,
preference of late stage investments over
seed and growth evident in enterprisetech.
The funding amount in late stage startups is
growing at a rate of 37% (2015-2019)
compared to 3% and -14% in growth and
seed stage respectively.
With the funding amount secured by late
stage startups growing at 37%, the average
ticket size & median funding amount record
40% & 33% jump respectively.
42

Udaan LenskartFirstcry Cardekho Paytm Mall
80
Unique ecommerce startups funded
$2.6 Bn
Total funding raised by startups in 2019
across 93 deals
-0.3%
between 2015-2019
Delhi NCR$3.1 Mn
Emerged as the startup hub for ecommerce startupsMedian funding amount in 2019
$15.6 Bn 700
Ecommerce
43

Year
FundingAmount
DealCount
While the funding amount surged by 10% in 2019 compared to 2018, deals have
been falling consistently — 48% lower compared to the 2016 which recorded the
most deals
Ecommerce Deals Lowest In The Past 4 Years
0
50
100
150
200
2014 2015 2016 2017 2018 2019
$0 Bn
$1 Bn
$2 Bn
$3 Bn
$4 Bn
Year
%ShareOfTheTotal
2014 2015 2016 2017 2018 2019
While there has been a slight jump or fall in funding amount, the deals have
remained more or less around the same mark in the last three years
Ecommerce Contribution To Total Funding
Goes Stagnant
0%
20%
40%
60%
44

Year
MedianFundingAmount
0
$2 Mnt
$3 Mn
$1 Mn
$5 Mn
$4 Mn
2014 2015 2016 2017 2018 2019
After falling in 2017, the median funding amount in ecommerce has grown
consistently. In 2019, it stood at $3.1 Mn, 45% higher than 2018
Median Funding Amount Records 12% Jump
Year
AverageTicketSize
$0 Mn
$40 Mn
$60 Mn
$20 Mn
$80 Mn
2014 2015 2016 2017 2018 2019
Reporting a 36% rise compared to 2018, ecommerce startups recorded
$36 Mn as the average ticket size in 2019
Average Ticket Size Recovering After 2018 Decline
45

Key Trends Observed
Between 2014 and 2019 the share of
ecommerce startups to the total funding
amount and deal count in the Indian startup
ecosystem is 27% ($15.6 Bn) and 14% (700)
respectively — highest among other sectors.
The deal count has witnessed a decline of
14% from 2017 to 2019. The growing
popularity of sub-sectors such as vertical
ecommerce, social commerce and private
label are the driving forces behind the
recovery of the Indian ecommerce sector.
The growth in both the median funding
amount and the average ticket size of funding
is a result of investors focussing more on late
stage investments than seed and growth
stages.
As per our analysis, ecommerce funding
deals and amount for ecommerce stood at
38, $21.7 Mn for seed stage — the former
remain unchanged from 2018 while funding
amount fell by 53%, In the growth stage,
ecommerce saw 26 deals bringing in $677
Mn in funding, which is 24% lower than 2018
for the deals and a 33% growth for the
funding amount compared to 2018. With 24
deals and $1.9 Bn in funding amount for
late-stage ecommerce startups, 2019 was a
mixed bag as the deal count was 23% lower
and funding amount 5% higher in 2018.
In recent years the investment activity in this
sector is witnessing a slowdown primarily
due to the saturation of the market and high
operational cost, which are hampering the
financial performance of startups in this
space.
After a steep decline of 36% in total funding
amount, the capital inflow in the sector
seems to be recovering. At $2.6 Bn, the total
funding amount in 2019 was 10% higher
than the previous year.
46

Paytm PhonepeDMI Finance Incred Okcredit
Top 5 Funding Grossers Of 2019
106
Unique fintech startups funded
$2.6 Bn
Total funding raised by fintech
startups in 2019 across 125 deals
13%
between 2015-2019
Delhi NCR
Takes the crown of India’s fintech hub
in terms of value of funding amount in
2019
$8.3 Mn
Median funding amount in 2019
Lending tech
The fintech sub-sector with the most deals in 2019,
followed by payments and insurance tech
$9.8 Bn 630
Fintech
47

Year
FundingAmount
DealCount
But the capital inflow was 71% higher in 2019 compared to 2018
Fintech Deals Fell For The First Time In 5 Years
$0 Bn
$2 Bn
$3 Bn
$4 Bn
$1 Bn
0
50
100
150
2014 2015 2016 2017 2018 2019
Year
2014 2015 2016 2017 2018 2019
Between 2014 and 2019, the average share of fintech to the total funding amount
& deals was 15% & 13% respectively
Deal Share Dropped In Total Funding Deals
0%
5%
10%
15%
20%
25%
%ShareOfTheTotal
48

Year
MedianFundingAmount
$0.0 Mn
$5.0 Mn
$7.5 Mn
$2.5 Mn
$10.0 Mn
2014 2015 2016 2017 2018 2019
The median funding amount for fintech startups grew at the rate of 29%
between 2015 and 2019
Median Funding Amount At All-Time High
Year
AverageTicketSize
$0.0 Mn
$20 Mn
$30 Mn
$10 Mn
$40 Mn
2014 2015 2016 2017 2018 2019
Reporting a 97% jump in 2019 compared to 2018, the average ticket size for
fintech stood at $25 Mn in 2019
Average Ticket Size Continues To Fluctuate
49

Key Trends Observed
Among the other startup sectors this is the
most impactful sector in the context of
economic disruption. The dream of digital
India can only be successful if the adoption
of fintech products in the country is steady
over a prolonged period. $2.6 Bn in total
funding was poured into fintech startups
across 125 deals in 2019, the funding
amount was 71% higher compared to 2018
whereas the deal count plunged by 9%
The median funding amount and average
ticket size of investments into fintech
startups stood at $8.3 Mn and $25 Mn in
2019. Both were significantly higher
compared to the previous years.
In terms of deals, with 61 deals, Growth
stage reported highest peak compared to
2018, while Seed stage deals reported 34
deals showing a downfall.
Deals poured in lending tech and payments
startups made 79% of the total deal count in
fintech (2019).
Lending tech and payments tech startups
are the primary factors responsible for the
positive trend behind this sector.
50

61
Unique startups funded in
consumer services
$993 Mn
Total funding raised by fintech
4%
between 2015-2019
Delhi NCR
The hub with maximum deals in 2019
$5 Mn
The median funding amount in
2019
Foodtech
The sub-sector with the most deals in 2019,
followed by hyperlocal
Grofers ZomatoBigbasket Urbanclap Dunzo
$5.6 Bn 602
Consumer
Services
51

Year
FundingAmount
DealCount
On a yearly basis, funding amount in the sector is growing at 4% whereas
the deals are slowing down at 16%
Consumer Services Deals Continue To Plunge
0
50
100
150
200
2014 2015 2016 2017 2018 2019
$0.0 Bn
$0.5 Bn
$1.0 Bn
$1.5 Bn
$2.0 Bn
$2.5 Bn
Year
%ShareOfTheTotal
2014 2015 2016 2017 2018 2019
The average share of consumer services to total funding amount and deals
was 9% and 12% respectively between 2014 and 2019
Share Of Consumer Services In Total Deals Drop
0%
5%
10%
15%
20%
25%
52

Year
MedianFundingAmount
0
$2 Mnt
$3 Mn
$1 Mn
$5 Mn
$4 Mn
2014 2015 2016 2017 2018 2019
Historic rise for consumer services with $5 Mn as the median funding
amount in 2019
Median Funding Amount Records 50% Jump
Year
$0 Mn
$20 Mn
$10 Mn
$30 Mn
$40 Mn
2014 2015 2016 2017 2018 2019
Compared to 2018's $35 Mn, in 2019, the average ticket size for consumer
services was $17 Mn in 2019
Average Ticket Size Dropped By 82% For Consumer
Services
AverageTicketSize
53

Key Trends Observed
Consumer services sector which primarily
consists of foodtech and hyperlocal startups
seems to be struggling in the context of
capital inflow. Funding data for 2019
showcases that the amount and deal count
in the sector declined by 59% and 17%
respectively.
Between the primary subsectors in this
domain — foodtech and hyperlocal, the
investor confidence towards foodtech
startups is likely to be higher given the
growing demand for online food delivery in
the country.
Contrary to the deal and funding amount
slowdown, the average ticket size witnessed
a steep decline of 52% in 2019 compared to
the previous year. On the other hand, the
positive trend in the median funding amount
can be linked to the higher concentration of
late stage deals in recent years.
In terms of funding stages, startups in the
late stage reported a 67% hike in deals.
While seed-stage deals plunged by 45%
Fading investor confidence towards this
sector can be linked to high failure rate of
consumer services startups due to lower
profit margins and high operational costs.
54

52
Unique startups funded in 2019,
compared to 66 of 2018
$512 Mn
Total funding secured by healthtech
12%
between 2015-2019
Bengaluru
Became the startup hub with
maximum Bdeals
$4 Mn
Median funding amount for
healthtech in 2019
46%
Contribution of capital poured into Cure.fit and 1mg
in 2019 to total funding amount
Cure fit Medlife1mg Carestack Healthkart
$2 Bn 441
Healthtech
55

Year
FundingAmount
DealCount
Both deals and amount for healthtech dropped by 17% and 4% in 2019
compared to 2018
Healthtech Funding On The Decline
$0 Mn
$400 Mn
$600 Mn
$200 Mn
2014 2015 2016 2017 2018 2019
0
25
50
75
100
125
%ShareOfTheTotal
Year
2014 2015 2016 2017 2018 2019
Overall, the average share of healthtech investments in total amount and
deals stood at 3% and 9% respectively between 2014 to 2019
Healthtech Share In Total Funding Going Flat
0%
3%
5%
8%
10%
13%
56

Year
MedianFundingAmount
0
$2 Mn
$3 Mn
$1 Mn
$4 Mn
2014 2015 2016 2017 2018 2019
As per the historic data, the median funding amount for healthtech is
growing at a rate of 64%
Median Funding Amount At Its Peak
Year
AverageTicketSize
$0.0 Mn
2014 2015 2016 2017 2018 2019
Continuing growth for the third year in a row, average ticket size for healthtech
was $11 Mn in 2019
Average Ticket Size Stood 28% Higher Than 2018
$5.0 Mn
$7.5 Mn
$2.5 Mn
$12.5 Mn
$10.0 Mn
57

Key Trends Observed
As per the economic survey 2017-18, the
private consumption expenditure towards
healthcare is growing at a CAGR (FY’12 to
FY’16) of 13% higher than other primary
commodities. This is a crucial indicator of
the growing demand towards healthcare
products and services in the economy.
Despite a downfall in the funding amount
and deal count between 2018 to 2019 the
median funding amount and average ticket
size of funding deals in these sectors is
showing a positive trend, indicating higher
probability of increased volume of capital
inflow in the coming years.
The policy uncertainty towards epharmacy
played a crucial role in depleting the investor
confidence towards this sector. Online
pharmacy was also a major sub-sector in
this domain spearheading the growth of the
overall sector. Although the overall funding
capital inflow in this subsector surged almost
2.7x in 2019, compared to the previous year.
This was primarily due to high value funding
rounds in established names like 1mg and
Medlife.
In terms of stages, late stage recorded 6
deals and $294 Mn funding amount recording
a 40% and 1% fall compared to 2018. While
for growth and seed, the deals stood at 24
and 27 in 2019 respectively.
Between 2018 to 2019 both the funding
amount and deal count had plunged by 4%
and 17% for healthtech.
58

The Next-In-Line
Sectors
Among the emerging sectors, the fastest growth rate for capital inflow (2014-19)
is seen in edtech (46%), logistics (24%) and media and entertainment (14%)
New-Age Tech Startups Attract Big Investments
In Urban India
FundingAmount
$0.0 Bn
$1.5 Bn
$2.0 Bn
$1.0 Bn
$0.5 Bn
Deeptech
Logistics
Transport TechMedia and Entertainment
Edtech
2014 20162015 20182017 2019
Year
26% 3x
The share of the sectors outside the top five sectors
in total funding raised in 2019 was 7% higher than
the previous year
Surge in the funding amount of transport tech
startups compared to 2018, explained by high value
funding rounds in electric mobility and ride-sharing
startups
59

The growing demand for AI/ML in enterprise tech, consumer services,
transport and other sectors is fuelling the high CAGR in funding deals for
deeptech startups
Deeptech Startups Attracting More Deals
DealCount
0
75
100
50
25
Deeptech
Logistics
Transport TechMedia and Entertainment
Edtech
2014 20162015 20182017 2019
Year
60

Demography
Top Startup Hubs Of
India
61

Bengaluru
Secured a total funding of $5.3 Bn
across 267 deals to become the top
hub in 2019
77%
Share of Delhi NCR & Bengaluru
in total funding raised in 2019
Pune
Recorded highest growth in
funding amount amongst
other hub
Chennai$25 Mn
Witnessed 31% drop in funding dealsAverage ticket size of funding
deals in Bengaluru
Year
FundingAmount
Bengaluru startups secured the most funding in 2019 with $5.3 Bn across 267 deals,
compared to 226 deals recorded by Delhi NCR startups
Bengaluru Keeps The Crown
2014
2015
2016
2017
2018
2019
0% 25% 50% 75% 100%
Bengaluru Delhi NCR Mumbai Pune Chennai Others
62

Funding amount
StartupHubs
Bengaluru, Delhi NCR, & Mumbai grabbed 87% of the total funding secured in 2019
$11 Bn Secured By Top 3 Hubs In 2019
$0 Bn $2 Bn $4 Bn $6 Bn
Bengaluru
Delhi NCR
Mumbai
Pune
Hyderabad
Others
Year
DealCount
With 1,745 deals, the share of Bengaluru in the total deals recorded between
2014-2019 stood at 35%
Bengaluru Grabs Over Half Of The Total Deals
2014
2015
2016
2017
2018
2019
0% 25% 50% 75% 100%
Bengaluru Delhi NCR Mumbai Chennai Hyderabad Others
63

Deal CountUnique Startups Funded
Number Of Deal Count And Unique Startups Funded
StartupHubs
Bengaluru, Delhi NCR & Mumbai together recorded 644 deals and had 84%
share in total unique startups funded in 2019
Top 3 Hubs Had 84% Share In Total Deal Count
0 100 200 300
Bengaluru
Delhi NCR
Mumbai
Pune
Hyderabad
Others
267
226
226
194
151
136
28
25
25
23
69
60
64

65

$26 Bn 1,745
Bengaluru
226
Fintech
Unique Startups Funded
With 49 deals, fintech recorded
maximum investment in
Bengaluru in 2019
$5.3 Bn
Total funding raised by Bengaluru startups
in 2019 across 267 deals
10%
CAGR (2015-2019) of
funding amount
$25 Mn
Seed Funding
Average ticket size of funding
amount in 2019
Hit all-time low
420
Unique investors
participated in startup
funding
Udaan Ola PhonePe Byju’s BigBasket
66

Year
FundingAmount
DealCount
As per 2015 to 2019 data, the CAGR of the funding amount recorded 10%
growth, while the deals have been diminishing by 4%
$5.3 Bn Secured By Bengaluru Startups
$0 Bn
$4 Bn
$6 Bn
$8 Bn
$2 Bn
0
100
200
300
400
500
2014 2015 2016 2017 2018 2019
Year
AverageTicketSize
2014 2015 2016 2017 2018 2019
Thanks to the rise in late-stage investments, the average ticket size of funding
deals rose to $25 Mn for Bengaluru in 2019
Average Ticket Size Record 13% Growth
$0 Mn
$10 Mn
$20 Mn
$30 Mn
$40 Mn
67

Funding Stage
CAGR(2015-2019)
-10%
10%
0%
50%
30%
40%
20%
With a 9% raise in funding deals in 2019, Bengaluru recorded 40% CAGR
in funding secured at the bridge stage from 2015-2019
Bridge Funding Records 40% Growth
Bridge Stage
40%
Growth Stage
30%
Late Stage1% Seed Stage
-9%
CAGR(2015-2019)
Funding Stage
-20%
-10%
40%
10%
20%
0%
Going below the average of 135 unique startups funded at seed stage (2014-2019),
Bengaluru recorded funding of just 90 seed stage startups, a 33% fall
Seed Funding Crunch Hits Bengaluru Hardest
Late Stage
17%
Growth Stage
0%
Seed Stage
-15%
22%
Bridge Stage
68

CAGR(2015-2019)
-20%
-10%
40%
10%
20%
0%
Bengaluru's seed and growth ecosystem record decline in the unique startups
funded in 2019 with just 90 and 86 startups getting funded respectively
Unique Startups Funded At Seed & Growth Stage
Report Decline
Late Stage
13%
Growth Stage
-2%
Seed Stage
-14%
22%
Bridge Stage
Funding Stage
Key Trends Observed
Between 2014 and 2019 the Bengaluru
startup ecosystem made 45% ($26 Bn) and
35% (1,745) of the total funding amount and
deal count in India.
Looking at the growth rate of funding
amount, deal count and unique startups
funded, it can be ascertained that the seed-
stage ecosystem in the city is struggling. The
slowdown of seed-stage investments is not
exclusive to Bengaluru, but also noticeable
in other Indian startup hubs.
Interestingly, the growth stage recorded the
highest growth in 2019 for Bengaluru, with
105 deals and $2.4 Bn amount being
recorded compared to 2018’s 98 deals and
$1.3 Bn.
In terms of sectors, fintech reported
maximum deals in Bengaluru with $856 Mn
being invested.
Highest number of deals recorded at the
seed stage were for enterprise tech startups.
While fintech and consumer services sectors
proved to be popular at growth and late
stage.
A robust startup ecosystem and wider
adoption of tech products in the city has
made Bengaluru the startup capital of India.
However, from 2018 onwards, the funding
activity in the city looks stable with minimal
fluctuations in both funding amount and deal
count.
Health Of Bengaluru’s
Startup Ecosystem
The opportunity for investment into new ventures
is shrinking in Bengaluru. This is apparent when
looking at the CAGR of unique startups funded at
the seed stage in comparison to bridge (primarily
Pre-Series A) and late (Series C and beyond)
stages. In the case of the seed stage, the CAGR
from 2015 to 2019 was -14%, whereas for bridge
and late-stage investments were 22 and 13%
respectively. Also, the number of seed-stage
funded startups went below 100 for Bengaluru for
the first time since 2015.
In the seed stage, the confidence towards
enterprise tech startups in Bengaluru continues to
remain high, as this was the top sector in terms of
startup funded at seed stage in the city in 2018 as
well.
Deeptech ended up in the second spot in terms of
startups funded at the seed stage in 2019 fuelled
by the growing demand for AI/ML-based solutions.
On the other hand, fintech, which was second in
2018, came down to fourth in 2019, as the count
of unique startups funded at seed stage plunged
by 41%.
69

Year
Going below the average of 135 unique startups getting funded at seed stage between
2014-2019, Bengaluru recorded lowest funding with just 90 startups getting funded,
a 33% fall
Bengaluru Worst Hit By Seed Funding Crunch
0
100
200
300
2014 2015 2016 2017 2018 2019
393
198
47
The average annual count of unique startups funded for the city between
2014 to 2019 was 246
Seed
Growth
Late
70

71

$20 Bn 1,442
Paytm Renew Power Delhivery Lenskart DMI Finance
194
Unique startups funded in 2019
$4.5 Bn
across 226 deals
5%
358
recorded between 2015 to
2019
Unique investors participated
in funding in 2019
Ecommerce$25 Mn
Recorded highest deal count in 2019The average ticket size of funding
amount in 2019
Delhi NCR
72

Year
FundingAmount
DealCount
Despite 8% fall in funding, the funding amount recorded a 5% jump in
funding in 2019
Delhi NCR Funding At All-Time High
0
100
200
300
400
2014 2015 2016 2017 2018 2019
$0 Bn
$1 Bn
$2 Bn
$3 Bn
$4 Bn
$5 Bn
Year
AverageTicketSize
$0 Mn
$20 Mn
$10 Mn
$30 Mn
2014 2015 2016 2017 2018 2019
With a 2% spike in average ticket size in 2019, Delhi NCR had an average
funding ticket size of $25 Mn
Delhi NCR Matches Bengaluru In Average
Ticket Size
73

CAGR(2015-2019)
Funding Stage
-10%
0%
30%
20%
10%
Despite growth in bridge (24%) and seed (5%) rounds, growth-stage funding
faced 4% downfall in funding for Delhi NCR in 2019
Growth Stage Funding Faces Downfall In Delhi
Bridge Stage Late Stage Seed Stage Growth Stage
24%
8%
5%
-4%
CAGR(2015-2019)
Funding Stage
-15%
15%
10%
0%
5%
-5%
-10%
With overall fall in seed funding, seed stage startups in Delhi NCR recorded
97 deals, 16% lower compared to the previous year
Late Stage Funding In Delhi NCR Picks Up Pace
Bridge Stage
0%
Growth Stage
-14%
Late Stage
-6%
Seed Stage
13%
74

Key Trends Observed
The advantages of being the national capital
are obvious but there are a number of other
factors pushing Delhi NCR to the top and
closer to Bengaluru. These include high-
speed connectivity, high per capita income
(NSDP) of $4,686 which is 2.63x higher than
the average in other Indian states.
Established startups in the city is growing,
the total deal count in late-stage startups for
2019 was 43, 5% increase compared to the
previous year.
From 2014 to 2019 both the funding amount
and deal count witnessed moderate change
year-on-year with a total of $20 Bn being
invested across 1,442 deals.
Overall, in terms of funding stages, seed
rounds had the most number of deals (16%
fall compared to 2018). Enterprise tech and
fintech accounted for 34% of the total seed
stage deals in 2019.
Looking at sectors, real estate tech startups
recorded the biggest surge in funding deals
with a 60% jump, while travel tech recorded
the biggest downfall in terms of deals.
Health Of Delhi NCR’s
Startup Ecosystem
Even as late-stage funding grew with the likes of
Paytm, Renew Power and Delhivery raising funds,
seed funding fell. Just like across most hubs, the
crunch in seed-stage investment in Delhi is evident
from the count of unique startups funded at seed stage
diminishing at -15% (CAGR 2015 to 2019) contrary to
the positive growth rate of 12% for late-stage startups.
In the case of the year-on-year growth of funding, the
amount is similar, with funding amount for late-stage
rounds growing at 8%, which is relatively higher than
seed-stage funding which has CAGR of 5%.
For Delhi, the count of unique startups in enterprise
tech, ecommerce and fintech were the highest at seed
stage in 2019. When it comes to average ticket size,
Delhi with $20 Mn was ahead of Bengaluru ($19.85
Mn) and Mumbai ($8.6 Mn). This also indicates funding
predominantly for late-stage startups. Among late-
stage startups, the count of funded startups in
ecommerce, real estate tech and fintech sectors was
higher than others.
CAGR(2015-2019)
-15%
15%
10%
0%
5%
-5%
-10%
In terms of deals and unique startups funded, Delhi NCR faces downfall;
CAGR stood at -15% and -2% for seed and growth stage from 2015-2019 respectivly
Seed Stage & Growth Stage Crunch Hits Delhi NCR
Bridge Stage
0%
Seed Stage
-15%
Growth Stage
-2%
Late Stage
12%
Funding Stage
75

0
50
100
150
200
2014 2015 2016 2017 2018 2019
Even as late-stage funding grew with the likes of Paytm, Renew Power and Delhivery
raising funds, seed funding fell by 14% compared to last year
Seed Funding Crunch Hits Delhi NCR
CountOfUniqueStartupFunded
Year
581
225
71
The average annual count of unique startups funded for the city between 2014 to 2019
was 207
Seed
Growth
Late
76

77

$5.7 Bn 964
InCred Acko Clevertap Instarem Eruditus
136
$1.25 Bn
across 151 deals
4%
249
2019
in startup funding in Mumbai
in 2019
Fintech$11 Mn
Enterprisetech
Recorded highest deal count in 2019Average ticket size of funding
amount in 2019
Recorded downfall in deals moving from second spot in
2018 to fifth in 2019
Mumbai
78

With a 27% rise in funding amount (2018-2019) Mumbai startups record the
highest growth in funding amount among the top three metro cities
Mumbai Outpaces Metros In Funding Growth
Year
FundingAmount
DealCount
$0.0 Bn
$1.0 Bn
$1.5 Bn
$0.5 Bn
2014 2015 2016 2017 2018 2019
0
50
100
150
200
Year
AverageTicketSize
$0.0 Mn
$5.0 Mn
$7.5 Mn
$2.5 Mn
$12.5 Mn
$10.0 Mn
2014 2015 2016 2017 2018 2019
Mumbai startups had $11 Mn average ticket size in 2019, which is less than half of
Delhi NCR & Bengaluru — $25 Mn
Average Ticket Size Surges In Mumbai But Still
Relatively Small
79

CAGR(2015-2019)
Funding Stage
-20%
0%
40%
20%
Between 2017 and 2018, the CAGR of late stage funding recorded a negative
growth rate of 11%
Late Stage Funding Amount Dropping In Mumbai
Growth Stage Seed Stage Late Stage
19%
36%
10%
-11%
Bridge Stage
CAGR(2015-2019)
-20%
-10%
10%
0%
20%
Compared to the other three stages, seed stage CAGR stood at -17% for
2015 to 2019 for Mumbai startups
Seed Stage Funding In Mumbai Falling Quickly
Bridge Stage
19%
Growth Stage
3%
Late Stage
5%
Seed Stage
-17%
Funding Stage
80

Key Trends Observed
In terms of sectors, ecommerce startups grabbed the
most number deals at the seed-stage, while the fintech
sector recorded the most number of deals overall and
had the biggest share of the funding amount in 2019.
The advantages of being the national capital
are obvious but there are a number of other
factors pushing Delhi NCR to the top and
closer to Bengaluru. These include high-
speed connectivity, high per capita income
(NSDP) of $4,686 which is 2.63x higher than
the average in other Indian states.
In 2019, the funding amount in Mumbai
surged by 27% in 2019 compared to the
previous year. On the other hand, the deal
count witnessed a moderate decline of 11%.
Similar to Bengaluru, the investment activity
in the seed stage startups of Mumbai seems
to be slowing down.
46% of the total funding deals were Series A
and above rounds in 2019 showing that
investors prefer backing mature startups
rather than Pre-Series or seed-stage
startups.
While seed funding has fallen in all metros,
Mumbai has shown a steep 22% decline in
count of startups funded at this stage
compared to 2018. On the other hand,
startups that have passed through this stage
previously are reaping the rewards with 14%
surge bridge funding in 2019 year-on-year.
Health Of Mumbai’s
Startup Ecosystem
In comparison to Delhi and Bengaluru, Mumbai seems
to have a lesser disparity in the ratio of startups in late-
stage to startups in the seed-stage over the past five
years (2014-2019).
While Bengaluru seems to be seed-stage dominant as
far as deal count is concerned over the past five years,
Mumbai has a lesser degree of skewness in its funnel.
However, this could be down to the fewer deals in
Mumbai startups in comparison to Bengaluru.
Even though the funding amount went up in 2019, the
average ticket size of $11 Mn shows that the funding is
reserved largely for bridge stage deals. Late stage and
growth stag had moderate growth, but the lack of seed
deals in 2019 has really hurt the overall growth of the
Mumbai startup ecosystem.
CAGR(2015-2019)
Funding Stage
-20%
-10%
10%
0%
20%
Just 54 unique startups were funded at seed stage in Mumbai last year
compared to 71 of 2018
Mumbai’s Seed Stage Unique Deals Record
Negative CAGR
Bridge Stage
19%
Growth Stage
4%
Late Stage
4%
Seed Stage
-17%
81

CountOfUniqueStartupsFunded
Year
24% decrease in count is the higher than both Bengaluru and Delhi NCR
Count Of Unique Startups Funded In Seed Stage Lowest
In 2019 Between 2015 to 2019
2014 2015 2016 2017 2018 2019
0
25
50
75
100
125
393
198
47
The average annual count of unique startups funded for the city between 2014 to 2019
was 142
Seed
Growth
Late
82

83

$1.5 Bn 184
Freshworks Uniphore Vue.ai Waycool Vivriticapital
23
$299 Mn
across 24 deals
-9%
44
2019
in funding rounds in 2019
Fintech$14 Mn
Recorded highest deal count in 2019Average ticket size of funding
amount in 2019
Chennai
84

Year
FundingAmount
DealCount
After a splendid 2018, the funding amount and deal count reported 20% and
31% decline in 2019
Chennai Reports Downturn In Funding
$0 Bn
$200 Mn
$300 Bn
$500 Bn
$400 Bn
$100 Mn
0
10
20
30
40
50
2014 2015 2016 2017 2018 2019
Year
AverageTicketSize
$0 Mn
$5 Mn
$10 Mn
$15 Mn
2014 2015 2016 2017 2018 2019
Rising by 18%, the average ticket size for Chennai's startups stood at $14 Mn
Average Ticket Size Grows For Chennai Startups
85

CAGR(2015-2019)
Funding Stage
-50%
-40%
0%
-20%
-10%
-30%
Based on 2015-2019 data, the bridge funding recorded negative CAGR of
-44% for Chennai
Chennai's Bridge Funding On The Fall
Late Stage
-1%
Seed Stage
-3%
Growth Stage
-22%
CAGR(2015-2019)
-20%
-10%
-5%
-15%
0%
As per 2015 to 2019 data, the CAGR of seed funding deal count reported
-18% growth rate
Chennai's Seed Funding Takes A Hit
Growth Stage
-10%
Late Stage
-13%
Seed Stage
-18%
Funding Stage
86

Key Trends Observed
Among the other top hubs of Indian startup
ecosystem, the investment activity in
Chennai’s startup ecosystem is falling at a
faster rate. This can be ascertained from the
fact that both the value of funding amount
and count of funding deals are diminishing at
a negative rate (2015-2019) of 9% and 14%
respectively.
While seed stage recorded a 49% decline in funding
amount, late stage had a 17% surge in 2019 compared
to 2018.
As a result, both the funding amount ($299
Mn) and deal count (24) plunged 20% and
31% in 2019 compared to the previous year.
Although the average ticket size of
investments is soaring due to higher
concentration of outliers.
A negative trend is evident across all funding
stages for Chennai’s startup ecosystem, as
seen in the recorded growth rates of various
indicators.
46% of the total funding deals were Series A
and above rounds in 2019 showing that
investors prefer backing mature startups
rather than Pre-Series or seed-stage
startups.
95% ($285 Mn) of the total funding amount was in
Series A and above rounds in 2019.
CAGR(2015-2019)
-20%
0%
-10%
-5%
-15%
The growth rate of unique startups funded, seed recorded -17% growth rate
while for growth and late stage it stood at -10%
Unique Startups Funded Fall Across Stages In
Chennai
Growth Stage
-10%
Seed Stage
-17%
Late Stage
-10%
Funding Stage
87

88

$1.2 Bn 171
Zenoti Bulbul Apps Darwinbox Subk WhistleDrive
23
$154 Mn
across 25 deals
37%
47
CAGR (2015-2019) of funding
amount
Unique investors invested in
Hyderabad based startups in
2019
Enterpriset Tech$7 Mn
Had the highest deal count in 2019Average ticket size of funding
amount in 2019
Hyderabad
89

DealCount
Year
FundingAmount
Despite fall in deal count, Hyderabad startups garnered $154 Mn in funding,
a 67% rise from 2018
After Rough 2018, Hyderabad Funding Charges Up
2014 2015 2016 2017 2018 2019
$0 Mn
$100 Mn
$200 Mn
$300 Mn
$400 Mn
0
10
20
30
40
50
Year
AverageTicketSize
2014 2015 2016 2017 2018 2019
With $7.7 Mn average ticket size, Hyderabad reports decline of 8% in 2019
compared to 2018
Average Ticket Size Continues To Decline For
Hyderabad
$0 Mn
$5 Mn
$10 Mn
$15 Mn
$20 Mn
90

CAGR(2015-2019)
-25%
0%
125%
75%
100%
50%
25%
The CAGR for late-stage funding amount showed 112% growth rate between
2015-2019 with about $80.5 Mn going into late stage in 2019 alone in Hyderabad
Late Stage Shows Phenomenal Performance In
Hyderabad
Late Stage
112%
Growth Stage
26%
Seed Stage
-1%Funding Stage
CAGR(2015-2019)
-20%
20%
0%
40%
With a 32% CAGR for 2015-2019, Hyderabad's late stage ecosystem flourishes
Late Stage Deals Skyrockets For Hyderabad
Late Stage
32%
Growth Stage
15%
Seed Stage
-20%
Funding Stage
91

Key Trends Observed
2016 and 2017 were the best year for
Hyderabad based startups in terms of capital
inflow. The funding amount and deal count
poured during this interval made 57% of the
total investments in the city between 2014 to
2019, whereas in case of deal count the
contribution was 46%.
Healthtech with approximately $13 Mn in
total funding was the top sector at seed
stage whereas, enterprisetech topped the
chart at both growth and late stage.
Being one of the prominent IT hubs of India
alongside Bengaluru. The availability of
quality tech workforce can give the startup
ecosystem of the city a much needed boost.
Although several government initiatives like
T-Hubs are already in place but a more
proactive approach is required from the
government side. In order to take the startup
ecosystem of the city at par with its metro
peers— Bengaluru, Delhi NCR and Mumbai
CAGR(2015-2019)
Funding Stage
-20%
20%
10%
0%
-10%
The -18% CAGR in unique startups funded from 2015-2019 shows Hyderabad's
seed stage ecosystem is going through a major crunch
Hyderabad’s Seed Stage Ecosystem In Hot Water
Seed Stage
-18%
Growth Stage
15%
Late Stage
19%
92

Indian Startup Hubs
Tier 1 Vs Mid-Tiers
31%
Ecommerce
& Agritech
Decline in total funding
amount poured in startups
based out of mid-tier cities in
2019 compared to 2018
Sector with maximum deals in
mid-tier cities
87%
Contribution of Bengaluru,
Delhi NCR and Mumbai to the
total funding amount
Info Edge
21
Most active investor in mid-tier
cities
Deals secured at
seed stage
Funding secured by mid-tier
startups across 32 deals in 2019
$243 Mn
93

Tiers
CAGR(2015-2019)
Against 8% CAGR of funding amount in Tier 1 cities, mid-tier cities reported
12% growth rate between 2015 and 2019
Mid-Tier Cities Outpace Tier 1 In Capital Inflow
0%
4%
8%
12%
2%
6%
10%
Tier 1 Cities Mid-Tier Cities
8
12
CAGR(2015-2019)
Tiers
-6%
4%
2%
0%
-2%
-4%
Mid-tier cities showed signs of growth with 3% CAGR between 2015-2019
compared to -6% growth rate for Tier 1 cities
Unique Startup Funding Shoots Up For Mid-Tier
Cities
-17%
19%
Tier 1 Cities
-6
Mid-Tier Cities
3
94

Based on 2014-2019 data, Tier 1 cities took away $57 Bn, a whopping 98%
of all funding secured by Indian startups
Tier 1 Cities Still Dominate Funding
Mid-Tier Cities
1.7%
Tier 1 Cities
97.9%
According to 2014-2019 data, mid-tier cities recorded mere 196 deals of the total
5,011 deals recorded during the said period
Mid-Tier Cities Carve Out Tiny Share In Total Deals
Tier 1 Cities
95%
Mid-Tier Cities
3.9%
Abroad
0.7%
95

Going Beyond
The Top 3
The startup ecosystem in Bengaluru, Delhi NCR and
Mumbai have always enjoyed bigger socio-economic
perks than any other startup ecosystem in the country.
The primary factors responsible for the thriving startup
ecosystem in these three cities are — availability of
adequate venture capital, higher spending power of the
inhabitants and a robust tech infrastructure. The
dominance of these three hubs of Indian startup
ecosystem can be ascertained from the fact that the
investment activity in Bengaluru, Delhi NCR and Mumbai
makes up 89% ($52 Bn) of the total funding, 84% of the
total deal count between 2014 to 2019.
Year
FundingAmount
From 2014-2019, Bengaluru, Delhi NCR and Mumbai took away $52 Bn
of the total $58 Bn raised by Indian startups
Top 3 Hubs Accounted For Most Of The
Total Funding
0%
50%
75%
100%
25%
OthersBengaluru, Delhi NCR & Mumbai
2014 2015 2016 2017 2018 2019
96

Key Trends Observed
Although high value venture capital inflow is
still largely cornered by the top three hubs,
the frequency of investment activity is rising
in the three other city hubs — Pune,
Hyderabad and Chennai.
The median funding amount for Pune stood
at $6.5 Mn in 2019.
With 76% CAGR recorded between 2015 to
2019 in median funding amount, Ahmedabad
outpaced Bengaluru, Delhi NCR and
Mumbai.
With $1.3 Bn funding, Pune, Hyderabad and
Chennai recorded 2x growth in 2019
compared to 2018.
Year
DealCount
Despite initiation of several new policies and activities to boost the startup
ecosystem, cities beyond the top three recorded just 827 deals between 2014-2019
Top 3 Hubs Contributed Majority To Total Deals
0%
50%
75%
100%
25%
Others Bengaluru, Delhi NCR & Mumbai
2014 2015 2016 2017 2018 2019
97

Pune, Hyderabad &
Chennai: The Next In Line
CAGR(2015-2019)OfFundingAmount
Hubs
-10%
50%
40%
30%
0%
20%
10%
With 45% CAGR, Pune had the highest growth rate compared to other hubs
during 2015-2019
*other hubs include top 8 startups hubs of India
Pune & Hyderabad's Growth Rate Outpaces Other
Hubs
CAGR (2015-2019) Median CAGR of other hubs
-17%
-9
ChennaiHyderabad
37
Pune
45
7
7 7
98

Between 2014 and 2019, startups in these 3 hubs recorded $4.5 Bn in funding
FundingAmount
$0.0 Bn
$1.0 Bn
$2.0 Bn
$1.5 Bn
$0.5 Bn
Hubs
Pune HyderabadChennai
Pune, Hyderabad & Chennai Had 8% Share In
Total Funding
Pune, Hyderabad & Chennai Had 10% Share In Total
Funding Amount
In 2019, the three hubs recorded $1.3 Bn in funding amount, 2x higher than 2018
Others
89.7%
Pune and Hyderabad
0.7%
99

47%
33%
-31%
DealCount
35%
25%
-26%
UniqueStartups
Funded
Hyderabad
Pune
Chennai
Year
Growth From 2018 To
2019
100

Investor
Participation
Analysis
& The Top 10 VCs
101

71%Decline in unique angel
investor participation in 2019
compared to previous year
892
Unique Investors participated
in startup funding in 2019
20%Contribution of top 5 venture
capital firms to total deal count in
2019
Deals taken per investor in
2019, compared to 1.6 in 2018
2
DealTakenPerInvestor
Year
DealParticipationAndUniqueInvestors
Compared to 993 investors participating in startup funding in 2018, 2019 had
892 investors who participated in startup funding
Unique Investor Participation At All-Time Low
In India (2015-19)
2014 2015 2016 2017 2018 2019
0
500
1000
1500
2000
2500
0.0
0.5
1.0
1.5
2.0
2.5
Total Investor Participation in Deals Total Unique Investors Deal taken per investor
102

From 42% share among total investors in 2018, the angel investor participation
was just 13.5% in 2019, the lowest since 2014
Angel Investor Participation Falls Drastically
Total Unique VCs & Corporates
86.5%
Total Unique Angels
13.5%
Year
%ofInvestors
In 2019, angel investor participation in startup funding was lowest in the
recorded period, with just 120 angels participating in funding deals
Angel Investor Share Among Investor Base At
Its Lowest
0%
50%
75%
100%
25%
Angel Investors Other Investors
2014 2015 2016 2017 2018 2019
103

VCName
NumberofDeals
KeySectors
India's Most Active VC Firms Of 2019
53
38
26
20
20
17
16
15
15
14
Consumer, Healthtech
Consumer, SaaS
B2B, Fintech
Healthtech, Fintech
Consumer, B2B
B2B, Healthttech
Education, New Economy
Consumer, Media & Content
Data & AI, Consumer
Consumer, Ecommerce
StartupsFunded
45
36
23
20
19
13
15
13
13
14
NotableStartups
104

Mergers And
Acquisitions
105

Bengaluru
Recorded the most number of M&As
629
Total M&As recorded between
2014 to 2019
35%
Share of enterprise tech and
media & entertainment in total
M&As recorded in 2019
Decline in M&A activity in
enterprise tech startups in 2019
compared to 2018
23%
Year
M&AsCount
With just 111 deals, Indian startup ecosystem recorded lowest M&As in the
last five years
M&As At 5-Year Low In 2019
2015 2016 2017 2018 2019
0
50
100
150
117
149
128
124
111
106

With 138 deals and 21.9% share in total M&A deals between 2014-2019,
enterprise tech took the lead
Enterprise Tech Record Highest M&As
Others
38.2%
Deeptech
7.3%
Fintech
7.9%
Enterprise Tech
21.9%
Ecommerce
8.9%
Consumer Services
15.7%
Bengaluru, Delhi NCR & Mumbai alone recorded 442 M&As, occupying the
majority share in the 629 M&As recorded between 2014-2019
Top 3 Hubs Accounted For 70% Of The Total M&As
Others
29.7%
Mumbai
17.6%
Bengaluru
27.0%
Delhi NCR
25.6%
107

India As A
Startup Hub
A Comparison
108

In 2019, India became the 5th most startup-
friendly economy in the world based on five
parameters:
Despite trailing the USA, the UK, Canada and Israel,
India has come a long way with the support of several
homegrown and international venture funds,
conglomerates and enterprises, government-backed
measures such as Startup India, Make in India, Digital
India and more, and domain-focussed initiatives which
in turn have helped foster a culture of entrepreneurship
and innovation in India.
In short, India’s startup economy has been booming.
Top networks/platforms that invested in 2018
Human Capital Investment
Research And Development
Entrepreneurial Infrastructure
Technical Workforce
Policy Dynamics
In 2019, India has 31 unicorns with seven startups
joining the club in the year. Amid all this fervour, it is
important to take a step back and reflect on the
growth factors — market and economic — that are
driving or deterring the startup economy in India.
India is often described as the poster child of emerging
markets for its vast commercial potential for tech
products and services. In a country with a population
of nearly 1.3 Bn people, even niche products can
have a significant addressable base.
Market
Parameters
Market Parameters
At A Glance
India is one of the fastest-growing economies in the
world and is perceived as being capable of offering an
abundance of opportunities for tech companies.
As the Indian economy continues to grow, disposable
income and purchasing power are increasing steadily.
This rising consumption is driven by the growth of
upper-middle income and high-income segments of
the population, both of which are expected to grow
from one in four households today to one in two
households by 2030.
Along with this, the population demography is another
advantage. Half of the country’s population is below
the age of 25 years with a median age of 28 years. In
terms of urban population growth, internet user base
and smartphone user base, India is second in the
world among all nations. Understandably, this has
made companies and startups gravitate to India.
1.35
44.77%
28.1
1.14%
34.50%
2.37%
560 Mn
345.92
India
Population (Bn)
Population Below 24 Years Of Age
Median Age
Population Growth
Urban Population
Urban Population Growt
Internet Users
Smartphone Users
Country
109

Economic
Parameters
Population (Mn) 0-24 age poppulation Median Age
Poppulation growth Urban poppulation Urban poppulation Growth
Internet Users (Mn) Smartphone Users (Mn)
0
2
4
6
8
10
China
Germany
India
IndonesiaIsrael
Japan
United Kingdom
United States
Canada
India’s huge diversity in culture, language, ethnicity and religions
is both a curse and a blessing for startups. On the one hand, a
startup’s understanding of customers or consumers is often
limited to specific regions, with their unique local languages and
local customs. This makes it hard for startups to scale their tech
products to customers across the country.
While there is a huge need for innovative solutions, particularly
those that alleviate poverty and improve the inclusion metrics,
India needs to be infrastructure-ready for innovations to flourish.
Given the scale of the Indian market and its resource constraints,
low-cost, high-impact solutions are the need of the hour. This
requires a huge push from the government in making Indian
economy ready for its market to reach full potential.
110

Economic Parameters
At A Glance
$9,459
6.7
7.2
$7,183
3.5
3.6
39,916.10
6.3
30.9
32.4
India
GDP (Billions, PPP)
GDP Growth Rate (%)
5 Year GDP Growth Rate (%)
GDP per Capita (PPP)
Unemployment (%)
Inflation (%)
FDI Inflow (Millions)
Tariff Rate (%)
Income Tax Rate (%)
Corporate Tax Rate (%)
Country While India undoubtedly has the potential, it still
trails other countries in terms of key economic
indicators such as GDP per capita (PPP), inflation,
tariff rates, and corporate tax rate. These indicators
are the worst amongst countries India’s economy is
being compared tol, including Canada, China,
Germany, India, Indonesia, Israel, Japan, UK and
the US.
Inflation (%)
Income Tax Rate (%)
Tariff Rate (%)
GDP Growth Rate (%)
GDP per Capita (PPP) Unemployment (%)
5 Year GDP Growth Rate (%)
Corporate Tax Rate (%)
GDP (Billions, PPP)
FDI Inflow (Millions)
China
Germany
IndiaJapan
United Kingdom
United States
Canada
IndonesiaIsrael
0
2
4
6
8
10
111

Economic
Indexes
The Narendra Modi-led government that assumed power
in 2014 has put digital transformation at the centre of its
plans. The central government has recognised startups as
one of the most important engines for economic growth.
Moreover, startups are expected to create jobs that will
narrow the high unemployment rate in the country.
Yet in 2019, India hit the highest unemployment rate seen
in the last 3 years i.e 8.5% (September 19). In 2019, for
ease of doing business, India moved to 63rd rank out of
190 countries climbing only 14 points in the ranking
compared to 23 points in 2018.
As per the Global Innovation Index 2019, India stood at
the 52nd position out of a total of 129 countries for
capacity and success in innovation. For a country that is
Research firm Heritage.org ranks various
countries on 4 parameters:
Limited Government Open MarketsRegulatory EfficiencyRule of Law
0
2
4
6
8
China
Germany
IndiaJapan
United Kingdom
United States
Canada
Indonesia
Israel
Rule of Law: Degree of a country’s legal protection of
private property rights
Limited Government: How free is a country from tax
burden and government expenditure
Regulatory Efficiency: How free is a country from legal
regulation
Open Markets: A country’s independence from
government control and interference
supposedly the fifth most startup-friendly economy
globally, this is a poor rank and highlights the slow growth
rate of the tech economy despite the ripe consumer
market. This lack of innovation is clearly depicted by India’s
relatively low expenditure on research and development.
112

The lack of quality research is evidenced by the fact
that many of Indian startups are imitations of
successful global ideas fine-tuned to serve local
needs.
Uber
Spotify
Amazon
Zoho
Ichef/Holachef
Razorpay
Healthifyme
Lenskart
Naukri.com
RedBus
Zoomcar
CarDekho
Grofers
Ikea
Mswipe
Google Maps
Ola
Gaana
Flipkart
Salesforce
Blue Apron
Stripe
MyFitnessPal
Warby Parker
Monster
GotoBus
Sixt
TrueCar
Instacart
Urban Ladder
Squareup.com
MapmyIndia
India is ranked as “worst” when it comes to open market and
regulatory efficiency despite having China in comparison, as per
Heritage.org.
Besides infrastructure another deterrent to the growth of startup
economy is expenditure to R&D. India’s expenditure on R&D
continues to be as low as 0.6% - 0.7% of the GDP, much lower
than countries like South Korea at 4.3%, Israel at 4.2% and
Japan at 3.4%. The worst part is that this low spending D has
been stagnant at 0.6%-0.7% for the last two decades.
Top 5 Countries R&D (as a % of GDP)
0%
2%
5%
3%
4%
1%
South Korea Israel Switzerland FinlandJapan
4.3%
4.2%
3.4%
3.2%
3.2%
113

All these foreign companies were established way before their
Indian counterparts were being built. One cannot deny that India
has become a startup hub with a total of 49,000+ startups being
launched (as of September 2018), however, the reality is that the
number of these startups were formed out of ideas that originated
elsewhere.
The global startup economy has achieved great heights with a
total economic value of nearly $3 Tn in 2019, a 20% increase
from the prior two periods. This growth is largely driven by high-
tech startups in the fields of advanced manufacturing and
robotics, blockchain, agritech and new food, and artificial
intelligence. However, startups and investment in startups from
these sectors are yet to become prominent in India.
GEIRank2018
Global Entrepreneurship Index 2018 Rankings
Country
United
States
Canada
United
Kingdom
GermanyIsrael
Japan
China
India
Indonesia
0
25
50
75
100
114

Transactional
Volume
One of the most celebrated emerging markets, India’s economic growth has proved
resilient in global slowdown events. However, in 2019, the Indian economy has
suffered from the point of GDP growth, consumer spending and NBFC crunch.
While the GDP expected to grow by 7.3% for the full fiscal year of 2018-19, reports
in the first week of 2020 suggest that India will miss this target. Ratings agency
Moody’s cut its forecast for India growth in FY20 to 4.9% owing to weak consumer
sentiment.
While the economic success in past years has been attributed to prudent fiscal
policy, the introduction of the goods and services tax (GST), socioeconomic factors
as well as less-than-stellar foreign investor sentiment have driven growth down.
With an estimated quarter of its population living below the poverty line, there
remains much work to be done.
When it comes to digital penetration too, a lot needs to be
done. Online shopping or ecommerce — often considered
the Indian startup ecosystem’s flag bearer — only
represents 2.9% of total Indian retail sales. The average
annual per capita spend is also low at $338.24. This is
among the lowest spends per capita among countries
that India is compared to.
As banking penetration increases, bank transfers are
expected to rise quickly. Currently used for one in five
ecommerce transactions, this method is expected to
increase at a compound annual growth rate of 84% till
2021 to take a 30.2% share of the transaction market.
Currently, with just 0.66% card penetration per capita
(debit + credit cards) and 0.02% for credit cards India is
still a majorly cash transactional economy.
China US UKIndia
Business to consumer ecommerce market value
Mobile commerce market value
Mobile commerce % of e-commerce market size
Bank account penetration
Card penetration per capita (Debit + Credit)
$1.2 Tn
$873.2 Bn
76%
80.20%
5.26
$744.1 Bn
$282.8 Bn
38%
93%
4.45
$232.05 Bn
$118.3 Bn
51%
96.40%
2.48
$1.2 Tn
$873.2 Bn
76%
80.20%
5.26
115

The inflows, however, did not start off on a strong note. FIIs sold net Indian equities worth $75.35
million in January. The pace of foreign money inflows started picking up from February and, over
the following five months, FIIs invested $11.5 Bn. In June alone, FIIs were net buyers of $231.45
Mn in equity.
Annual FDI inflows in the country are expected to rise to $75 Bn over the next five years, as per a
report by UBS. The government of India is aiming to achieve $100 Bn worth of FDI inflows in the
next two years.
Trade Inflow
Outflow & FDI
Trends
Foreign direct investment in India
increased by $2,155 Mn in October
2019. It reached an all time high of
$8,569 Mn in August of 2017 and a
record low of $1,336 Mn in November of
2017.
Foreign institutional investors (FIIs) have
been aggressive on Indian equities in
the first six months of 2019 despite
increased volatility and uncertainty
around the elections, and the economic
downturn since August.
FIIs bought net local equities worth
$11.41 Bn between January and June,
the most since the corresponding
period of 2014, when they had invested
forex worth $9.91 Bn. In the six months
ended December 2018, FIIs saw an
outflow of $3.78 Bn. The outflow in
January to June 2018 was $681 Mn.
Trade Inflow Outflow & FDI Trends
0
4000
8000
6000
2000
*Source: tradingeconomics.com, Reserve Bank of India
Dec’18 Jan’19 Mar’19 Apr’19Feb’19 May’19 Jun’19 Aug’19 Oct’19Jul’19 Sep’19
3008
3691
2370
2444
4676
3034
7000
3673
1824
1704
2155
$Mn
Month
116

Impact
Of Indian
Startup
Economy
An Analysis
117

According to the government of India, the Startup India initiative has helped create
an estimated 187K direct jobs since its inception in 2016 and the number of related
indirect jobs is currently at 560K. This job growth has come at a rough cost of more
than INR 2,500 Cr disbursed by the government to fund startups.
In 2016, the centre had established an INR 10K Cr fund of funds under the Small
Industries Development Bank of India (SIDBI) to meet the financial needs of the
startups.
Impact On
Jobs
Figures In Lakh
Month
Average Jobs Created By Startups In India
0
4
8
6
2
Nov’18 Dec’18 Jan’19 Mar’19 Apr’19Feb’19 May’19 Jun’19
6.11
5.65
4.90
4.52
4.50
4.49
4.37
4.6
118

The major contributor to this job creation is the gig
economy.
Food delivery startup Swiggy said it employs around
210K delivery boys and intends to increase the
number to 500,000 in the next 18 months. Scores of
others such as Swiggy’s rival Zomato, on-demand
delivery service Dunzo and cab-hailing companies
Uber and Ola together employ millions of workers
who are not considered ‘traditional employees’ and
are paid per order or ride.
While the gig economy has been frowned upon by
corporates, startups have been the early adopters of
it, and now large corporates are driving the demand.
*Source: EPFO
2016-17 2018-19
In 2018-19, the job created by startups had plunged by 18%
Job Profiles Created
0 10 30 4020 50
Large Corporates
Professional Services
45%
30%
27%
22%
Development Sector
8%
9%
Other Sectors
1%
2%
Startups
37%
19%
119

Emerging
Technologies
While not quite ready for deployment, 5G will soon enter
the Indian market, offering high-speed data transfers and
information processing in real-time to make machine-to-
machine communication faster than ever before. It is
expected to redefine network and communication
infrastructure as we know it. However, with such a huge
investment ($70 Bn) and infrastructure requirement,
uniform implementation of the technology across the
country will likely extend beyond 2021.
On the other hand, the world is moving towards being more
and more connected becoming a ‘smart’ ecosystem. This
comprises connected devices, communication channels,
and AI-driven data processing which has enabled the
newest opportunities.
As predicted last year, spacetech, internet of things (IoT),
3d printing and electric vehicle battery management
technology has come a long way in 2019.
According to DataLabs By Inc42 analysis, here are the
technologies which will dominate the tech ecosystem in
2020:
Internet of Everything (IoE)
Representing a more advanced stage of IoT (Internet
of Things), IoE includes people and processes as an
important part of the whole system. IoE will enable
hyper-connectivity and vision of connected,
collaborated, and intelligent systems powered by
smart devices and data-driven management.
IoT, in its broadest conceptualisation, includes any
type of physical or virtual object or entity that can be
made addressable and given the ability to transmit
data without human-to-machine input. Things are
often items that would not have been networked in the
past; with this, automation of communication is also
central to the IoT concept. The IoE, on the other hand,
includes user-generated communications and
interactions associated with the global entirety of
networked devices as well.
Process
People
Data
Things
Endpoints
IP Address
Objects
Data To
Meaning
Machine To
Data
Machine To
Machine
People to machine
(P2M)
People to People
(P2M)
Meaning to value and action
Connected
Context
Subject Sensing
Sending
Analyzing
120

Similar to SaaS, enterprises can leverage artificial
intelligence (AI) without investing much money to make
data-driven decisions. Major cloud providers have started
offering comprehensive AI stacks that can be used without
deploying any cognitive computing or machine learning
provisions.
In the past, companies needed a lot of resources and
capital, as well as time to build up infrastructure and
technical systems, know-how for AI applications.
Now, AIaaS has minimised the development and
deployment time. So, basically, startups and businesses
can get an AI application or model off-the-shelf as per their
needs. AIaaS enables everyone, regardless of how much
knowledge they possess, to take benefit of AI. For the
developers clean APIs are being provided, the users get
coding skills graphical user interfaces together with detailed
instructions in order to ensure data processing pipeline.
Few internet companies have already started providing
AIaaS. Amazon’s in-house expertise in predictive analytics
is available on Amazon Web Services by means of machine
learning services. Amazon is also coming up with open
source software DSSTNE - Deep Scalable Sparse Tensor
Network Engine.
Artificial Intelligence-As-A-Service
(AIaaS)
AI
Researcher
Rediogist
CRO
Laboratory
Physician
PatientDrug
Maker
Cryptocurrency
Lifestyle Advice
Diagnostics
Unstructured
Data
Predictive
Analystics
SOP’s
Validation
Omics
Data
Patient
Stratification
Clinical Decision
Support
MRI/Images
121

The common definition of space-as-a-service is the change
in the real estate model from asset ownership to
monetisation of access to the space and services. Yet,
space as a service is more than just about real estate. It is
a model that facilitates a change in management’s beliefs
about the design and function of real estate. This new
thinking proactively enhances productivity and experiences
within a company’s real estate portfolio.
Co-working, co-living, and now a retail concept called
“brandboxing” are all examples of the SPaaS business
model, in which landlords essentially provide a suite of
services that enable tenants to easily utilise the space. That
entails everything from digital connectivity to furniture,
fixtures and even the staffing required to operate their
businesses.
While WeWork, the largest lessee of commercial office
space in New York City, did not invent the idea of space-as-
a-service, its tremendous success has undoubtedly been
an impetus for changing the way the industry looks at the
tenant-landlord relationship. Indian companies such as
Space-As-A-Service (SPaaS)
Protecting digital data of users is the first thing enterprises will need to ensure. People become aware of their privacy concerns,
making enterprises to take serious action towards data security in 2020.
In August of 2017, the Supreme Court of India decided
that the “right to privacy is protected as an intrinsic
part” of the constitutional rights to life and personal
liberty. This paved the way to Personal Data Protection
Bill, 2018 (PDPB).
The PDPB is modeled after the GDPR (General Data
Protection Regulation), but there are significant
differences between the Indian legislation and European
law.
With clear legislation in place, Indian corporations are
taking the steps to implement privacy and data security
for their organisations. This has created a huge market
for data security services and products in India. India’s
cybersecurity market is expected to register an annual
growth of 15.6 per cent and rise to $3.05 Bn (about INR
21,600 Cr) by 2022 from $1.97 Bn (about INR 14,000
Cr) in 2019.
Data Security
122

Cloud has reshaped entire infrastructure and will
continue to do so. The usage of the cloud continues to
reach greater heights because of flexibility, cost-
effectiveness, and scalability it does offer. 2020 will see
more microservices architecture that makes it easier to
develop complex systems faster and with great
efficiency.
Microservices (or microservices architecture) are a
cloud native architectural approach in which a single
application is composed of many loosely coupled and
independently deployable smaller components, or
services. These services typically:
While much of the discussion about microservices has
revolved around architectural definitions and
characteristics, their value can be more commonly
understood through fairly simple business and
organisational benefits:
Microservices & Cloud
Have their own stack, inclusive of the database and
data model
Communicate with one another over a combination
of REST APIs (Representational State Transfer), event
streaming, and message brokers
Are organised by business capability, with the line
separating services often referred to as a bounded
context.
Code can be updated more easily.
Teams can use different stacks for different
components.
Components can be scaled independently of one
another, reducing the waste and cost associated with
having to scale entire applications because a single
feature might be facing too much load.
Service
Discovery
Client
Identity
Provider
CDN
Static
Content
API
Gateway
Microservices
Services
Remote
Service
Services
Services
Services
Management
123

Much of the criticism directed to finance minister
Nirmala Sitharaman is largely due to her
predecessors’ moves. To her credit, though, are the
abrogation of angel tax and recent GST reforms.
Along with angel tax, the I-T orders and notices
which have haunted startup founders in the past
badly. Dozens of startup founders confirmed that
harassment by I-T AOs was one of the main reasons
that led them to shut down their offices.
While the late Arun Jaitley who was the former
finance minister showed little interest towards tax
complaints, it took a long time to the former
commerce minister Suresh Prabhu to minimise the
tax harassments of startups under Section 56(2)(viib)
of the I-T Act, Sitharaman in her short span as
finance minister has responded rather quickly with
initial reforms.
The DPIIT-recognized startups are now exempt from
tax under Section 56(2)(viib) of the Income Tax Act
when such a startup receives any consideration for
issue of shares which exceeds the Fair Market Value
of such shares.
“To mitigate the genuine difficulty of startups and
their investors. It has been decided that Section
56(ii)(viib) shall not be applicable to DIPP registered
startup.” - N Sitharaman
The government has constituted a dedicated cell
under a member of CBDT for addressing the
problems of startups. The Central Board of Direct
Taxes has so far exempted 1,658 startups (
November, 2019) under Section 56 (2) (vii) of the
Income Tax Act, 1961. “All notices will be disposed
of within three months from the date of reply. No
assessee will have do anything after three months
once he has given the reply,” Nirmala Sitharaman
had averred in August, this year.
A startup has to file a duly signed declaration in
Form 2 to DPIIT {as per notification G.S.R. 127 (E)}
to claim the exemption from the provisions of
Section 56(2)(viib) of the Income Tax Act.
Introducing Section 54EE in the Income Tax Act,
1961, exemption from tax has also been made on
long-term capital gain (For up to INR 50 Lakhs) if
such long-term capital gain is invested in a fund
notified by central Government. The condition of
minimum holding of 50% of the share capital or
voting rights in startup is relaxed to 25%.
The Government
Intervention &
Policies
Angel Tax Abrogation
Relief form enhanced surcharge on
Long-term /Short-term Capital Gains
Withdrawal of Angel Tax provisions
for Startups and their investors
In order to encourage investment in the capital market, it has been
decide to withdraw the enhanced surcharge levied by Finance
(No.2) Act, 2019 on Long/Short term capital gains arising transfer
of equity shares/units referred section 111A and 112 A respectively.
To mitigate genuine difficulries of startups and their investors, it
has been decide that section 56(2)(Viib) of the Income-tax Act shall
not be applicable to startup registered with DPIIT.
It has also been decided to set up a dedicated cell under member
of CBDT for addressing the problems of startups. A startup having
any income-tax issue can approach the cell for quick resolution of
the same.
Measures to Boost Economy
Taxation Measures
124

Inc42’s Annual Indian Tech Startup Funding Report 2019

Inc42’s Annual Indian Tech Startup Funding Report 2019

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