The document summarizes research from the Microsoft Accelerator on technology startup trends in India. It finds that over 6,000 companies have been tracked, with the highest number of new starts in 2010-2011. Bangalore accounts for over 41% of new starts. Ecommerce makes up 1/3 of new companies. Bangalore also sees the most closures, with over half of closures in 2011 occurring within the first year. Common reasons for failure include an inability to raise funds or get customers to pay quickly. Most entrepreneurs who fail go on to work for larger companies due to stigma around failure in India.

1. India Tech Startup Starts and
Closure
Microsoft Accelerator Research
http://www.microsoft.com/india/acelerator
indiaaccelerator@microsoft.com
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

2. Key notes about this research
1. The Microsoft Accelerator database tracks
over 6214 entities and 3948 technology
product companies in India
2. We have face-face interactions with founders
of 65% of the companies to verify starts and
closures besides secondary data
3. Closure data is based on f2f interactions
alone
Entities are not registered private companies, but LLC or partnerships
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

3. 2010 & 2011 had most new tech product
company starts, but 2012 is poised to trend
lower
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

4. Bangalore has over 41% new starts followed by
NCR and Chennai, Hyderabad has seen steepest
declines over 5 years
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

5. eCommerce starts made up 1/3rd of all new
companies, followed by B2B web
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

6. Bangalore has most closures, both in
number and % of companies started
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

7. More than half of the 190 closures* in 2011
were companies between 6 months to 1 year of
formation
Closure rate of Indian companies has been ~26% of companies that close within 1 year
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

8. Besides inability to raise funds, most were
unable to get customers to pay money quickly
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

9. 61% of first time failed entrepreneurs are
heading back to work at a big company
Failure has such a big stigma in India, that most join a larger company . Many also do it so they can pay off their loans
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

10. Most entities are not shutdown, but are
being kept for side projects
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator

11. Takeaways for Entrepreneurs
1. Work on getting as many customers to pre-
pay some of your revenue as an advance
2. Raise capital for 24 months rather than the
18 month norm of valley startups
3. If you are going to bootstrap, have funds for
18 months, not 6 months, which is the valley
norm
© Copyright Microsoft India Accelerator 2012 http://www.microsoft.com/india/accelerator