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The Indian startup ecosystem: Drivers, challenges and

pillars of support
12 September 2019

 SABRINA KORRECK
In recent years, startups have been receiving increased attention in many parts
of the world. In India, the number of startups has increased fast and more
support has become available in all dimensions. This paper analyses the current
state of the Indian startup ecosystem and has three goals: to provide an
understanding of the growth drivers and motivations of Indian startup founders;
identify challenges facing these startups; and outline the pillars in place that
support them. The analysis uses data collated from semi-structured interviews
with startup founders, investors, and representatives of support organisations. In
addition, a survey of relevant literature strengthens the robustness of the
findings.

Attribution: Sabrina Korreck, “The Indian Startup Ecosystem: Drivers, Challenges

and Pillars of Support”, ORF Occasional Paper No. 210, September 2019,
Observer Research Foundation.

1. Introduction
Startups,[1] in India as in many other parts of the world, have received increased
attention in recent years. Their numbers are on the rise and they are now being
widely recognised as important engines for growth and jobs generation. Through
innovation and scalable technology, startups can generate impactful solutions,
and thereby act as vehicles for socio-economic development and transformation.

The Indian startup ecosystem has evolved dynamically over the last two
decades. Some startups were founded in the 2000s, but the ecosystem was still
immature as only a few investors were active and the number of support
organisations such as incubators and accelerators was limited. Some successful
exits[2] occurred in the late 2000s and in the last ten years, the number of startups
increased fast and more support has become available in all dimensions.
Bangalore has emerged as India’s primary startup hub, but significant founding
activity is also taking place in Mumbai and the National Capital Region (NCR), as
well as some smaller cities.[i]
The aim of this study is to provide a comprehensive understanding of both the
growth drivers as well as the challenges faced by Indian startups. Further, the
study investigates how the startup ecosystem has developed over the years and
describes where and which kind of support is available. While the primary focus
is on technology-driven startups, the study recognises that non-tech, social and
micro-entrepreneurs have also come up with innovative ideas and solutions.

To provide insights on these issues, a qualitative research was conducted. Semi-

structured interviews were done with experts in the Indian startup ecosystem,
including startup founders, investors, and representatives of support
organisations (see Annex for more details on the research methodology,
including the list of interviewees). A literature review was also carried out to
provide further background information.

The rest of the paper is structured as follows. The second section outlines the
key opportunities and growth drivers of India’s startup ecosystem, as identified
through the interviews. Section 3 then outlines the challenges facing startups in
India. The penultimate section describes how the ecosystem has evolved, and
where and what kind of support is available to help startups overcome challenges
and seize opportunities. The paper concludes by outlining the imperatives of
further action to support India’s startups.

2.  Startups in India: Opportunities and Growth Drivers

Startups do not exist in a vacuum but are part of a broader business
environment. Thus, the growth drivers of the Indian startup ecosystem need to be
understood in the context of various factors: earlier economic reforms and
current market trends, as well as the impact of technological change and
changing attitudes on the part of government, large companies, and society
overall. This section describes the five key opportunities and growth drivers
which were identified in the interviews.
2.1 Scope and Characteristics of the Indian Market
India is often described as “the posterchild of emerging markets” for its vast
commercial potential for startups. In a country with a population of nearly 1.3
billion people, even niche products can have significant market potential. In the
1990s, economic reforms moved India towards a more market-based economic
system. Since this liberalisation, the overall economic development has been
dynamic and as of 2017, the Indian economy had a GDP of US$2.726 trillion.
 With a GDP growth of 7.0 percent in 2018,[iii] India is one of the fastest-growing
[ii]

large economies in the world. Therefore, the Indian market is perceived as being
capable of offering an abundance of opportunities for startups.

As the Indian economy continues to grow, incomes and purchasing power are
increasing steadily. Rising consumption is driven by the growth of upper-middle
income and high-income segments of the population, which will grow from being
one in four households today, to one in two households by 2030.[iv] Along with
this, the demographics of the population are another advantage. Half of the
country’s population are below the age of 25 years and the youth is aspirational.
[v]
 The nearly 700 million people born through the late 1980s to the 2000s carry
material ambitions and have the ability to spend and make those goals a reality.[vi]

India’s huge diversity in culture, language, ethnicity and religion has proved to be
both a curse and a blessing for startups. On the one hand, a startup’s
understanding of customers is often limited to certain regions, where they know
the local language and local people. This makes it hard for startups to scale their
products to customers across the country (see section 3.2 for further detail). On
the other hand, if solutions are successful in addressing the needs of diverse
customers pan-India, they can likely find market uptake in other geographies
such as Africa and Latin America, and even the developed world. In addition,
many Indian startups do not only look at Indian problems, but offer customised
solutions for markets abroad. For instance, Indian startups often do pilots and
serve customers in the United States, where the user base has a much higher
ability to pay.

2.2. Technological Change

There is a huge need for innovative solutions, particularly those that alleviate
poverty and benefit a large number of people. Given the scale of India and its
resource constraints, low-cost, high-impact solutions are required. Technology
startups play a crucial role in accomplishing this, because of their potential for
scalability and exponential growth.

Over the last few decades, technological change has reduced the cost of building
digital products and has provided access to consumer markets. In the past,
companies had to set up physical infrastructure to interact with customers, which
implied high customer acquisition costs that proved prohibitive for small
companies in the same field as established corporations. As India improved its
digital connectivity, market access barriers have been brought down. The
broadband penetration is increasing fast and the number of wireline subscribers
in 2018 is expected to increase by 44 percent over the next four years.[vii] The
number of internet users was pegged at 483 million in 2018 and is projected to
reach 666.4 million in 2025.[viii] In addition, the government initiative, “Digital
Saksharta Abhiyaan”, was started to promote digital literacy and help people
become more knowledgeable about the digital world.[ix]

Startups rely on market access as well as possibilities to identify and charge

customers. Establishing someone’s identity is grit in the wheels of commerce; as
the means for identity verification and digital payments have become more widely
available in recent years, startups can serve legions of new customers.[x] The
Aadhaar biometric ID system, introduced in 2009 and assigning Indian residents
a unique identity number, has made it easier for companies to validate
information about their customers. Successive Indian governments have also
actively promoted both the opening of bank accounts and the expansion of digital
payments to promote financial inclusion.[xi] Thus, large parts of the population are
now able to conduct digital payments, as well as receive government benefits
and subsidies, and therefore become part of the formal economy. Moreover,
Aadhaar and the payments systems are part of the “India Stack”, which is
envisioned as a new social infrastructure that will “help propel India into the 21st-
century digital economy”.[xii] Increased financial inclusion, as well as the banknote
demonetisation in 2016, led to a boom of fintech[3] startups, which was the top
funded sector in 2018.[xiii]

2.3. Increased Political Will and Government Support

The government under Prime Minister Narendra Modi, who assumed power in
2014, put digital transformation at the centre of its plans. The federal as well as
some state governments increasingly recognise startups as important engines for
economic growth. Moreover, startups are expected to create jobs that will narrow
the high unemployment rate in the country. In 2018, startups accounted for 2.64
percent of the total jobs created in India that year; they are projected to create
between 200,000 and 250,000 jobs in 2019.[xiv]

The Modi government has made various efforts to support startups. The flagship
initiative, “Startup India”, was initiated by the prime minister in 2016 “to build a
strong ecosystem that is conducive for the growth of startup businesses, to drive
sustainable economic growth and generate large scale employment
opportunities.”[xv] Measures include a fund of INR 100 billion, financial support for
incubators, establishment of tinkering labs, tax benefits, and a simplified
recognition process for the setting-up of businesses, among others.[xvi] So far,
14,036 startups have been recognised according to the definition of the
Department of Industrial Policy and Promotion (DIPP); 660 startups have
received business support; and 132 have been funded.[xvii] Some interview
partners for this paper expressed doubt as to whether ‘Startup India’ has indeed
made impact. However, they see the programme as a good step overall.
2.4. Companies Increasingly Seek to Engage in Open Innovation
In an increasingly uncertain and fast-moving business environment, large
companies face pressures to innovate ever more rapidly. Their challenge is
twofold: to innovate incrementally to grow their existing business, while
understanding ongoing changes in their industry and making provisions for more
radical innovations. The latter is proving to be difficult, and more large companies
realise that they cannot simply rely on internally generated knowledge and on
building everything themselves. As this ‘closed innovation’ paradigm loses its
relevance, more companies turn towards open innovation approaches.[xviii]

Thus, companies in India are increasingly reaching out to startups to increase

their own innovativeness. They enter into exchange and strategic partnerships
with startups, while supporting them with various corporate-specific resources.
 These engagements can be mutually beneficial.[xx] While a few years ago,
[xix]

corporate managers needed to be convinced of the benefits of working with

startups, there has been a recognisable change in attitudes and many
established companies today acknowledge the competitive advantages of
startups, especially in terms of their speed and passion.

2.5. Changing Perceptions towards Entrepreneurship

Those who are willing to take risks are the ones who can put ideas into practice
and seize opportunities. Most startup founders in India have strong intrinsic
motivations and report being driven by their passion, curiosity, satisfaction that
comes from problem solving, and desire to make a difference in society. Many
Indian founders have previously worked at a corporate environment, but despite
the stability in those jobs and the benefits of high salaries and other perks, they
perceived those jobs as constraining to their creativity. A lack of identification
with a corporate culture often leads them to create something on their own, which
enables them to define their own values and control their own direction.
Moreover, a change in perceptions among the broader society is noticeable. The
success stories of remarkable exits and India’s first unicorns[4] have received
much media attention. Subsequently, some founders have become India’s
“startup heroes”, contributing to a current image of entrepreneurship as “cool”
and “glamorous”. Despite some hype, the social acceptability of entrepreneurial
careers is indeed increasing.

3.  Challenges
There are typical challenges that startups all over the world struggle with. Certain
obstacles, however, are more peculiar to the Indian business environment. In this
study, India was often described as a harsh environment for startups. This
section outlines the five key challenges facing Indian startups.

3.1. Building and Scaling an Indian Startup

The challenges faced by Indian startups begin with essentials such as hiring and
managing a team, dealing with customers, and developing a marketing strategy.
In particular, many Indian founders have a technical background and lack
business knowledge.

For running a startup, a significant amount of working capital is required. Many

startups, especially at early stages, are bootstrapped, i.e. self-funded through the
founders’ own savings, or using capital from friends and family. Some startups
have enough paying customers, so that they are or become self-sustaining
through the revenue and profits they generate and are able to grow organically.
Thus, while not every startup needs external investment, many of them start
looking for investors as they plan to scale their business. However, finding the
right investor and raising funds is difficult, even if they have received positive
responses on their product and have some proven market validation.
3.2. Diversity and the Digital Divide
In general, an information gap exists between those who provide solutions and
those who are supposed to use them. In order to build successful products,
startups need to bridge this gap and develop an in-depth understanding of the
customers and their needs. This is particularly difficult in the Indian context: India
is a highly diverse country with a plethora of cultures, languages, ethnicities and
religions. Because Indian customers are equally diverse, the startups’
understanding of them is often limited to certain regions, which they know well
and where they know local people to work with. In that sense, comparative
advantages are linked to specific regions. Therefore, building up a pan-Indian
startup is more difficult, because they have little understanding of customers in
other regions.

In addition, there is a disconnect between the startup founders and the

customers, for whom they aim to build products. Most startup founders are well-
educated and come from well-off backgrounds in urban metro cities. However, as
nearly 70 percent of the Indian population live in rural areas,[xxi] the customers of
the mass market tend to come from low-income backgrounds in villages. Due to
different living environments, startups often have an insufficient understanding of
the customers and their needs.

3.3. Taking Products to Market and Low Willingness to Pay

A further challenge for startups is to take their products to the market as Indian
markets appear difficult to penetrate. One reason is the competitive landscape:
Often, many firms are already present and many more enter the market,
including copycats. A second reason is that startups are at a disadvantage
compared to large companies. On the one hand, this is due to the fact that big
market players are more capable of dealing with bureaucratic regulations. On the
other hand, public procurement is seen as weak and government prefers to sign
contracts with established companies. However, if startups are promoted by
large companies (for instance, through partnering with them in the context of their
open innovation initiatives), they may find it easier to capture a market. A third
reason is that communication with and retention of customers takes time and
effort. Convincing Indian customers is difficult, especially if the startup develops
innovative products and caters to new market segments.

Furthermore, it is hard for startups to generate willingness to pay for their

products and services. Despite increasing incomes, the Indian customer base
continues to be price-sensitive and has little willingness to pay for products and
services. Often customers expect discounts, or buy cheaper versions from China.
Therefore, startups face the challenge of building affordable solutions, which is
sometimes done at the expense of quality. For this reason, many businesses are
volume driven, with marginal returns. For those startups which do not charge
customers through means of digital payment, collecting and ensuring timely
payment can be another issue.

3.4. Hiring Qualified Employees

For many job-seekers, joining a startup as an employee is not an attractive
career option, due to the inherent risk that the startup might fail. Instead, the
majority prefer to work for large corporations, which promise more stable jobs. In
addition, startups can rarely compete with the reputation and compensation
structures which large companies can offer. Many of those who start working for
startups, switch to established companies after a few years. Job changes in the
opposite direction occur less likely, because many get used to the benefits of a
corporate job.

A second reason is that many job applicants are not sufficiently skilled. Startups
see a gap between the knowledge taught to students in colleges and the
knowledge needed for the jobs, especially in sectors in which technologies
change at a fast pace. Because they have little awareness of industry needs,
fresh graduates are usually not readily employable from the beginning. As a
consequence, when hiring new staff, startups have to invest significant amount of
time and cost to train new employees.

A third factor is that a significant number of highly qualified specialists move

abroad for jobs. At the same time, and in contrast to many other startup hubs
globally, Indian startups are yet to attract international talent. Bureaucracy and
visa requirements make it difficult to hire employees from outside India and
expatriates are more attracted to places like Singapore, where the living standard
is higher.

3.5. Complex Regulatory Environment

The government of India has introduced policies that aim to ease the business
environment for startups. However, the present regulatory framework in which
startups operate is widely seen as difficult, inefficient and unpredictable. Indeed,
the World Bank Ease of Doing Business index ranks India 77th of 190 countries;
the country is 137th of 190 countries in the World Bank Starting a Business
Ranking index.[xxii]

Startups in India often feel encumbered by bureaucratic processes, which appear

to lack underlying standards. They have insufficient possibilities to find
information, and there is little planning security about how long processes can
take. In addition, regulations can suddenly change or startups receive random
notices. As a result, startups have to find frustrating workarounds, waste valuable
time or pivot their business model.

Other challenges concern the legal incorporation and registration as a startup as

well as the closing of a business. Despite government’s declared intention to
hasten the setting up of a business, the process is generally described as lengthy
and costly. It requires many approvals, constituting a high entry barrier. After the
legal setup is accomplished, formal registration as a startup is a necessary
requirement to qualify for tax exemptions and further benefits. There are
specified criteria linked to the government’s startup definition, but few startups
fulfilled them. The criteria were lowered subsequently, but startups still seem to
face difficulties obtaining registration certificates. Some startups fail, but closing
down a business was described as even more difficult than setting it up.

The tax policy and its enforcement are considered unfriendly for startups. This,
on the one hand, applies to the Good and Services Tax (GST), which was
introduced in July 2017. There is still a lack of clarity on how it works and which
items are applicable as tax base or not. The startups are required to file their
taxes regularly, even if they do not yet generate any revenue. Moreover, if
payments from customers are delayed (which is not uncommon), startups run
into the danger of a liquidity squeeze. If they fail to file the tax on time, they risk
huge penalty payments. On the other hand, much criticism was directed towards
the so-called “Angel Tax”, which was introduced in 2012 with the aim to thwart
money laundering.[xxiii] (After the end of the interview period for this study, the
government announced in August 2019 that ventures that are registered with
India’s Department for Promotion of Industry and Internal Trade, will no longer be
subject to the tax.[xxiv])

4.  The State of the Indian Startup Ecosystem

Besides the entrepreneurs themselves, the startup ecosystem consists of various
stakeholders, including incubators and accelerators, investors, service providers,
educational and research institutions, and big companies. This section describes
how the Indian startup ecosystem has evolved, and where and what kind of
support has become available to startups.

4.1. Evolution of the Indian Startup Ecosystem

The Indian startup ecosystem has evolved considerably over the last two
decades. More actors have joined and they provide different forms of support to
startups. Thus, the ecosystem has grown significantly and is now in the process
of maturing.
Few startups had already come up in the New Economy in the late 1990s, which
ended with the burst of the dot-com bubble. At that time broadband penetration
was poor, Internet connectivity was low and support structures were hardly
available. In the next decade, the situation changed slowly, and more startups
entered the market. Some of them performed well, and some exits happened.
One watershed was the major investment received in 2009 by the Bangalore-
based e-commerce startup, Flipkart. In subsequent years, the number of startups
as well as various incubators, accelerators and other support organisations
increased fast. During the period 2013 to 2018, between 7200 and 7700 tech
startups were incepted, which equates to an overall base growing at 12-15
percent.[xxv] The first Indian unicorn was InMobi, an advertising technology startup
based in Bangalore.[xxvi] Since then, the number has increased to currently 19
unicorns, which are listed in figure 2.[xxvii] The US$10-billion One97
Communications, which is the parent organisation of the payment system Paytm
and e-commerce platform Paytm Mall, is currently the highest valued Indian
startup.[xxviii]

Simultaneously, access to external capital increased significantly. Large funds

were set up in India and foreign capital came from investors in the US,
Singapore, China, Japan and the Middle East. During an early funding boom,
much money was invested into startups with just ideas, and these resulted in
huge financial losses. Subsequently, after some funds closed and a cleansing of
the market took place, approaches to investing became more prudent. In recent
years, the situation began to improve again. In addition, government and CSR
programs are also impacting the investment scene.

As the first generation of Indian entrepreneurs have made their mistakes and
experiences, more knowledge has become available in the ecosystem. Some of
these founders eventually became successful and inspired more to follow their
entrepreneurial steps. Moreover, a sense of community among the people in the
startup ecosystem has emerged over time. Overall, the Indian ecosystem has
now reached a certain size and support has increased significantly in all
dimensions.

Table 1: Indian Unicorns

Valua
tion
Startup Sector (US$
billion
)

Mobile &
InMobi telecommunic $1
ations

2
0 E-commerce
1 Snapdeal & direct-to- $7
4 consumer

Auto &
Ola Cabs $6.2
transportation

2
One97
0
Communica Fintech $10
1
tions
5

2 Hike Mobile & $1.4

0 telecommunic
1 ations
 E-commerce
6 Shopclues & direct-to- $1.1
consumer

BYJU’S Edtech $5.75

2
0
1
7
ReNew
Other $2
Power

2 OYO Rooms Travel $4.3

0
1
8

Supply chain,
Swiggy logistics, & $3.3
delivery

Internet
Zomato software & $2.18
services

PolicyBaza
Fintech $1
ar

Supply chain,
Udaan logistics, & $1
delivery

BillDesk Fintech $1.8

 Supply Chain,
Delhivery logistics, $1.6
delivery

Supply chain,
BigBasket logistics, $1
delivery

2
0 Internet
1 Dream11 software & $1
9 services

Ola Electric Auto &

$1
Mobility transportation

Supply chain,
Rivigo logistics, $1
delivery

Source: CB Insights (2019)

4.2. Geography of Startup Support

Most support is available in Indian metro cities, with each city having its own
history and local peculiarities and therefore unique ecosystem. Bangalore in the
state of Karnataka is India’s primary hub, which is most advanced in regards to
the number of startups as well as support organisations and investors. One in
every four of total tech startups in India are based in Bangalore.[xxix] One reason
why Bangalore developed as the startup hub is the location of many engineering
colleges and renowned academic institutes. The ready-made talent pool then
provided a locational advantage, and several Indian as well as multinational
companies and R&D centers in aerospace, biotech and later IT industries
opened their offices in Bangalore. Three of the four biggest Indian employers in
the IT sector, which include Infosys, IBM India, as well as Wipro, are
headquartered in Bangalore.[xxx] The city is seen as attractive for people from
outside due to its welcoming attitude as well as cosmopolitan vibe. In addition,
the government of Karnataka has established a dedicated authority, which seeks
to design and implement progressive policies to create a conducive environment
for startups.

Significant startup activity is also taking place in Mumbai in Maharasthra, as well

as the National Capital Region (NCR), particularly in Delhi, Gurgaon and Noida.
Of all Indian tech-startups, 21 percent are based in NCR and 14 percent in
Mumbai.[xxxi] In a recent report on the geography of startup activity,[xxxii] all three
cities are members of a group of so-called “Elite Global Startup Hubs”, which
further include Austin, Chicago, San Diego, and Seattle in the U.S., Berlin, Paris,
and Stockholm in Europe, Shanghai and Singapore in Asia, and Tel Aviv in
Israel. This group follows the group of six “Superstar Hubs”, which comprise San
Francisco Bay Area, New York, Beijing, Los Angeles, Boston and London.

Since Mumbai is the financial capital of India, the city is home to many fintech
startups. Startups in the NCR region are active in a broad variety of areas. In
both cities, cost of living as well as rents are significantly higher as compared to
Bangalore, where affordable office and co-working space is more easily
available. In the NCR, culture and social attitudes are considered to be more
conservative, which is reflected in a lower social acceptance for entrepreneurial
careers. In addition, and in contrast to Bangalore and Mumbai, interview partners
in Delhi reported that safety, especially for female employees, is a concern and
restricts work place flexibility.
Startup ecosystems are also developing in some further Tier-1 and Tier-2 cities.
In the above mentioned report on global startup cities,[xxxiii] Chennai, along with
Bangalore, Mumbai and Delhi, is considered an established global startup hub,
while the cities of Pune, Hyderabad, Ahmedabad, as well as Calcutta are
referred to as emerging startup hubs. NASSCOM[xxxiv] further mentions Kerala,
Jaipur as well as Chandigarh as emerging hubs. Entrepreneurs from these cities
receive less visibility and there are fewer support organisations available and
less possibilities for founders to interact with and learn from each other. In that
sense, these ecosystems are not as mature as above mentioned ones, but there
is optimism that positive developments will continue in coming years. In addition,
some state governments such as Kerala (“Startup Mission”) and Karnataka
(“Startup Cell”) have taken further initiative by introducing programs to nurture
early stage startups. There is little support available in rural areas.

4.3. Core Ecosystem Actors and their Provided Support

As more actors have joined the ecosystem over the recent years, available
support to startups has increased in all dimensions. Different support
organisations exist and their offering varies, according to their institutional
missions and to what kind of startups they target. This section gives an overview
of core actors and what kind of support they provide.

4.3.1. Institutional Missions and Targeted Startups

The focus of this study is on incubators and accelerators, which, along with the
global trend, have emerged in increasing numbers. In 2018, there were at least
210 incubators and accelerators in India, which corresponds to an 11-percent
increase as compared to 2017.[xxxv] Business incubators and accelerators can be
understood as organisations, which support the foundation and growth of new
businesses through different kinds of resources and services. Typically,
incubators take in startups without an a priori fixed time horizon and fund
themselves by taking rent, while accelerators usually accept startups for fixed-
term, cohort-based programs, sometimes in exchange for equity.[xxxvi] Both
business-incubating organisations can be distinguished between publicly and
privately sponsored ones. While publicly sponsored incubators often are more
interested in job creation and social impact, private-independent incubators
emphasise profitability, and private-corporate incubators tend to focus on
contributions to their mother corporation’s strategic goals.[xxxvii]

Publicly sponsored incubators and accelerators in India are associated with and
run by academic institutions or industry associations, which consider themselves
as non-profit organisations. They receive at least some part of their funding from
governmental authorities, as they aim to not only promote the growth of startups,
but also consider the creation of employment opportunities and the startups’
potential social impact. Further, incubators, who are associated with universities
or technology institutes, aim to nurture entrepreneurial spirit and talent at the
campus and to take IP, which has been developed in research projects, to
commercialisation. As much tinkering takes place at engineering colleges in
particular, these incubators invite teams to basically walk in with ideas. Similarly,
incubators and accelerators run by industry associations, target startups at a very
early stage and help them with prototyping, developing a proof of concept,
validating and launching their products. While university incubators tend to be
industry-agnostic, incubators run by industry associations, focus on startups
working on upcoming technologies in the industry, which they represent.

There are government initiatives that conceptualise policies for creating

conducive conditions for innovation across different technology sectors. While
they do not incubate startups themselves, they seek to nurture entrepreneurial
talent at the institutional level. They do so by, for instance, partnering with public
incubators, providing incentives (e.g. reimbursement of patent filing costs), or
setting up a seed fund for B2G (business to government) startups, where can
apply for conducting pilots with governmental departments.
Privately sponsored incubators and accelerators include corporate and
independent ones. Established companies initiate corporate incubators and
accelerators as a platform to engage with startups. They either set them up
themselves, or partner with third parties, which can be described as acceleration-
as-a-service providers and manage the program on their behalf. The key
selection criterion is the strategic fit, i.e. supporting a specific startup should have
relevance for the established corporation and contribute to realising their
strategic objectives.[xxxviii] Some select startups, which have potential to become
future suppliers or customers, or which help the established firm generate leads
or additional income through revenue-sharing models. Other corporate
incubators and accelerators can be understood as a future exploration tool, as
they help the established company monitor and understand what is happening in
the market and evaluate new technologies. In contrast, independent incubating
organisations, which are run and funded by private business people, target a
more diverse group of startups. Their focus is mainly on tech startups, but they
are otherwise rather sector-agnostic. Some independent incubators have hybrid
business models, i.e. they combine their incubation offer with a co-working
space, an investment fund, or an open innovation program. There are also
support platforms for female entrepreneurs. Their mandate is to help female
founders who face significant challenges in India´s male-dominated business
culture.[xxxix]

Further important actors in the ecosystem are angel capital investors, who are
typically high net-worth individuals from traditional business backgrounds, who
seek to diversity their portfolio. In addition, some founders and senior managers
from the first generation of successful Indian startups have become investors.
Some of these individuals use angel networks to scout for promising startups and
then manage the relationships with portfolio companies. In addition, many Indian
as well as global venture capital funds have become active in the ecosystem in
recent years. Angel and venture capital investors nowadays tend to prefer
startups, which already have a proof of concept as well as some market
validation.

The support organisations and investors do not see themselves as competitors,

but rather as interconnected and complementary partners. Regular interaction
takes place among the actors, for instance through informal exchange or
referrals of startups. Moreover, publicly sponsored or independent incubators
often tie up with industry partners, which give startups an opportunity to present
their use cases and do possible pilots with corporate partners.

4.3.2. Elements of Startup Support

When startups need handholding, the core support dimensions include the
provision of office space and infrastructure, business advice and network access,
as well as funding.

Office Space and Infrastructure

One dimension of support is the provision of space to work. This includes offices,
meeting rooms as well as recreational areas such as a cafeteria or break room.
Often, such work environments also have a function room, which is suitable for
hosting events with a larger audience. Basic facilities such as printers, coffee
machines, Wi-Fi connection, and front desk service can be used by the startups.
In addition, sometimes they are equipped with hardware and software, which
startups need to build their products. Moreover, a few support organisations also
provide access to lab space, where technical equipment such as 3D printers, IoT
devices, lasers, and virtual reality headsets is available.

Publicly sponsored incubators have a strong focus on providing physical space to

many early stage startups in exchange for a monthly, subsidised rent. One
particular advantage of many university incubators is that they can grant access
to lab space and facilities at the campus. In recent years, the government has
provided additional funding for tinkering labs. Private independent and corporate
incubators and accelerators sometimes do not provide space for startups to work
themselves, but rent offices in a co-working space such as the well-known chain
WeWork. Moreover, some also offer virtual incubation to startup teams, which
are based in remote locations. Typically, investors do not provide office space to
their portfolio companies.

Some years ago, a gap in the ecosystem existed as space for people to work
was missing. However, as more and more incubating organisations as well as
co-working spaces opened over time, a lack of space no longer seems to be a
big issue. A study on similar organisations in Africa warns that such quick and
wide diffusion does not necessarily imply that they are operating successfully.
 Indian startups need more than just space to work and many interviewees
[xl]

pointed out that the provision of space is rather secondary, as effective startup
support organisations put more emphasis on building a community and getting
the right people together. This is in line with research which found that beyond
the more traditional focus on office space provision, there is increased attention
on providing access to capital and specialised services in order to speed up the
startups’ time-to-market and bring them into a common network.[xli] Thus, the
provision of further support distinguishes incubating organisations from ordinary
co-working spaces. In fact, some self-proclaimed incubators and accelerators
were perceived to be simply providing a shared work environment, without giving
significant further support.

Business Support and Mediation

Startups (especially younger teams) may have knowledge gaps or lack

connections, required to successfully build their business. Thus, startups can
receive internal support from an incubator or accelerator’s on-site employees,
who serve as a first contact and can help with practical issues and provide some
first-level support. They also organise different workshops and seminars; in the
case of accelerators typically in the form of a structured program over few
months. As startups are co-located and attend courses together, they start
interacting, share experiences and give each other valuable feedback. Thus, to
facilitate such peer-to-peer learning, incubators and accelerators actively foster
an open and collaborative culture. When the internal team lacks the specialised
knowledge or resources required by startups, they can assist through facilitating
introductions to experienced entrepreneurs or industry experts in their external
network. For instance, they do matchmaking with mentors, who can advise
startups in one-to-one sessions, or make connections with possible customers
and partners, with whom startups can conduct pilots to test their product. In
addition, startup support organisations have a pool of service providers, who can
give startups pro-bono advice startups in functional areas such as HR,
marketing, accounting and legal matters. Furthermore, incubators and
accelerators actively build a community through hosting of events, such as
informal networking meetups, talks by technology experts, or exposure visits to
conferences or international ecosystems. Sometimes, offline communities are in
place to promote further networking.

All types of incubators and accelerators aim to provide business support and
connect their startups, but they partly have different foci. University incubators,
for instance, have an edge in helping startups with hiring, as they can attract
students from the nearby campus as interns. The core competence, which
corporate accelerators can offer to startups, is to bridge their gap to go to the
market by helping them with their distribution strategy and connecting them to
their own customer base for real feedback. Independent-private incubators
strongly emphasise the value of a community and connecting their startups to
experienced mentors in their network. As many angel investors hold, or
previously held senior roles in traditional business fields, they could assist
startups with their in-depth market knowledge.
Asking for an evaluation of actual business support and mediation provided gave
a mixed picture. Many startups consider having good mentors and a supportive
environment in which peer-to-peer learning can take place as very helpful.
However, some founders said that they did not experience much mentoring and
that they would need much more business support. Some founders did find a
supportive environment, in which they benefitted strongly from exchange with
peers. Others described that little exchange between startups takes place, with
honest conversations and empathy being particularly rare. In fact, more important
than the business support is that organisations have a strong network and can
make connections to the right people locally and in the market. In regards to
university incubators it was pointed out that they are often run by academics,
who lack practical business experience and thus, cannot facilitate connections to
important people in the market. While angel investors stay rather passive in
regards to business advice, they can be of more help in connecting startups to
people in the market. Now that some first generation of Indian startups has
become successful, it is hoped that they carry on supporting the next generation
of entrepreneurs. While the quality of business support as well as the strength of
their networks may differ, both factors decide whether a support organisation or
investor can act as a real catalyst or not.

Funding and Assistance with Fundraising

Finally, startups need money to finance their operations. While some startups are
self-sustaining through their generated revenue, others seek to raise external
funding, especially if they plan to scale.

Incubators and accelerators typically provide no or rather small amounts of

money. Instead, they focus on making startups investment-ready by teaching
them how to pitch and giving them feedback on their pitch decks. In addition,
they typically partner with a pool of investors and can make introductions to
suitable investors. In particular, accelerator programs typically end with a so-
called demo day, which offers a platform to startups pitch in front of a diverse
audience, which includes investors and corporate managers. If corporate
managers see potential in startups, there is a possibility for a continued strategic
partnership through which both parties can enter into a buyer-vendor relationship
or engage in a revenue-sharing model. While the program itself is not a vehicle
for investing into startups, corporate incubators and accelerators are often in
touch with corporate venturing units, who could possibly put in money at a later
stage.[xlii] Some private independent incubators and accelerators have an
attached investment fund or emphasise their strong network, which includes
possible investors. One of their advantages is that their mentors get to know the
startups well, which helps them to make informed investment decisions. Finally,
most significant amounts of capital come from angel and venture capital
investors.

Opinions on the actual availability of external funding of startups gave a very

mixed picture. Representatives of startup support organisations and angel
investor networks, who participated in this study, described a positive
development that more capital has become available in recent years. This is in
line with findings from a recent report,[xliii] which provides data on the five-year
growth of startup cities worldwide. Accordingly, five Indian cities are in the top ten
of cities with the highest growth rates in venture capital deals. Delhi, Bangalore
and Mumbai already had the highest numbers of venture deals in the previous
period 2010-12, but experienced further steep increases: the number of venture
capital deals in Delhi rose by 407 percent from 168 to 851, in Bangalore, the
number of venture deals increased by 306 percent from 195 to 792, in Mumbai
the number went up by 288 percent from 133 to 516 deals. Overall, Indian
startups raised $11 billion in funding in 2018.[xliv] Thus, it appears that raising
funding has indeed become much easier for startups. However, the interviewed
startups reported that a majority of them are bootstrapped and not self-sufficient,
but struggle to obtain funds, although they can show a proof of concept and
some market validation. The opinion was raised that the numbers of startups who
really get funding are very bad.

Table 2: Top Global Cities by Five-Year Growth in Venture Capital Deals

Dea Dea
ls ls %
Ra Geograp
(20 (20 Chan
nk hy
10- 15- ge
12) 17)

Bangkok,
1 9 65 622%
Thailand

Ahmedab
2 7 49 600%
ad, India

Jakarta,
3 24 161 571%
Indonesia

Delhi,
4 168 851 407%
India

Bangalor
5 195 792 306%
e, India

6 Ho Chi 8 32 300%
Minh
City,
 Vietnam

Mumbai,
7 133 516 288%
India

Calcutta,
8 8 31 288%
India

Dubai,
9 23 86 274%
UAE

Kuala
10 Lumpur, 28 103 268%
Malaysia

Pune,
11 26 91 250%
India

Hyderaba
30 40 104 160%
d, India

…
 Chennai,
40 42 101 140%
India

Source: Florida, Hathaway (2018)

Naturally, raising funding is a highly competitive process and not every startup is
considered promising. However, the huge discrepancy of opinions called for a
closer investigation of selection criteria. A few observations became apparent.
First, after an initial funding boom, some private investors have “burnt money”
and gained better understanding on what works and what doesn’t. As a
consequence, many have taken a more cautious approach and now fund more
mature startups, which already have a MVP (minimum viable product) and some
proven market traction. In 2018 as compared to 2017, the seed stage funding
dropped by 40 percent.[xlv] As a consequence, raising funding at earlier stages is
not easy for Indian startups. The drought in angel investors, who can provide the
first Rs 50 lakh to Rs 1 crore that will enable startups to build a prototype and run
some early test with customers is indeed considered the biggest obstacle that
Indian startups face.[xlvi] Second, as investors have limited information, they
strongly invest in people. Thus, money comes on a trust-basis, which obviously
implies that investors fund among known circles and based on similarity, not
diversity. Founders, who come business families, graduated from certain
prestigious academic institutions and have big corporate names on their CV, are
perceived to be more capable. This may partly be true, as they have gone
through a filter already. But it is also seen as an “elitist thing”, where others with
good ideas but from less privileged backgrounds face difficulty to raise funding.
In particular, women entrepreneurs struggle with stereotypes and face bias in the
investment cycle[xlvii]. Third, selection criteria mainly aim to identify tech
companies, which promise to scale fast and cater to markets, which serve
millions of customers.
Thus, the impression emerged that investors predominantly fund startups, which
are likely to exit within few years with multiple times of the initial amount invested.
Fewer investors have a more long-term orientation and are willing to invest in
R&D-intense startups. Further, although more startups are currently entering
consumer markets, the ecosystem was described to still be less favorable to
startups who develop hardware or other physical products. This creates the
impression that in India, many people put a lot of expectations in a basket called
tech. Moreover, perspectives were raised that many investors chase trends and
fund startups working on advanced technologies, which – despite few interesting
use cases – have low relevance to solving more urgent Indian problems.

5.  Conclusion
The Indian market offers many opportunities for startups and in turn, startups
carry great hopes to promote growth and create employment. Over the last two
decades, more startups emerged in India and the associated ecosystem has
developed dynamically. Consequently, support has increased in many
dimensions: office space and infrastructure, business support in regards to
mentoring and networking, as well as the availability of financial capital. There is
palpable optimism that the ecosystem will continue to mature. Nevertheless,
Indian startups face significant challenges. Overcoming such hurdles will require
efforts of all stakeholders, i.e. the ecosystem actors, governmental authorities, as
well as the startups themselves. In addition, changes in the broader cultural
milieu would be helpful to encourage people taking risks and possibly developing
impactful solutions.

Startups do not exist in silos, but are part of the broader economy. Policy reforms
improving general economic conditions as well as investments in digital and
physical infrastructure (for instance, internet connectivity, roads and public
transportation, power and electricity), are expected to also benefit startups. With
regards to the regulatory framework, improving the implementation of existing
startup policies and removing inefficiencies within the bureaucracy is considered
crucial to ease doing business for startups. Reducing necessary paperwork and
documentation, improving access to information, establishing more standardised
operating procedures and clear criteria (e.g. how to bid for government contracts
or get licenses) would help startups. Moreover, it is imperative to channel
investments in education to develop a broader talent pool. In particular,
ecosystem actors who participated in this study advocated for an integration of
entrepreneurship courses in college curricula, which would better prepare
students for careers in startups.

While the amount of angel and venture capital invested in Indian startups has
increased tremendously in recent years, the ecosystem still lacks resources. In
particular, as investors tend to fund rather mature startups, more money is
required to help the younger ones develop their prototypes and MVPs. To bridge
the gap from ideation to the next step, startups and ecosystem actors hope that
governmental authorities can incentivise angel investments by, for instance,
abolishing the angel tax or giving other kinds of tax benefits. Moreover,
governmental approaches to set up a seed fund and give grants to startups are
considered as effective initiatives. In addition, it was pointed out that more
startups should be acquired by large, established companies. Moreover, the
phenomenon that successful entrepreneurs support promising younger startups,
which is common in mature startup ecosystems, needs to further gather pace.

Parallel to the rise in capital, support has also increased in regard to office space
and business support dimensions. However, the ecosystem actors are
geographically concentrated in metro cities and startups that are not placed in
these locations and cannot change bases, may find it more difficult to succeed.
Support must be extended to entrepreneurs in smaller tier 2, 3 and 4 cities. Due
to given resource constraints, India needs low-cost and high-impact solutions
and thus, the focus on scalable tech startups is understandable. However, it
should not distract from the fact that valuable solutions could also come from
other kinds of entrepreneurial ventures.
Startups rely on thorough market and user research. While they learn some
market knowledge from mentors, it will probably not spare them from talking to
their users to get a better understanding of their needs. In particular, to overcome
the disconnect between startup founders and customers, especially in rural India,
they need to do more field research and obtain greater exposure to people on-
site. In regards to the difficulty of finding talent, startups may have to widen their
hiring net and be prepared to train first-hires. As most startups are not able to
compete with large companies in salary, they depend on attracting talent with
other incentives, such as giving them learning opportunities. In addition, fostering
a good work culture can be helpful to attract and retain talent. Moreover,
eradicating the male-dominated “bro-culture” will also help attract qualified
women and foster a more inclusive and innovative environment.

Beyond the described support dimensions, another critical factor is how

supportive the general culture is towards entrepreneurship. Startups have
received increased attention and media as well as popular culture have reported
successful exits and featured stories about “startup heroes”.  Thus, being a
startup founder is nowadays seen as “cool” and the social acceptability of
entrepreneurial careers has increased. However, many enterprising people are
still being discouraged from pursuing their passions by their families and social
environment, and feel pressure to choose a job and lifestyle, which is perceived
to offer more stability. Instead, the culture needs to be more encouraging towards
people, who take agency and create something on their own. The willingness to
take risks should be more appreciated and failure seen with less negative
judgement. In addition, overcoming stereotypes is a necessary step to increase
diversity, which would help the big ideas of our day get the ecosystem of support
they need in order for them to have a chance.[xlviii]

This study collected a plethora of perspectives to the current state of the Indian
startup ecosystem. It identified the opportunities they recognise, the challenges
they face, and what the imperatives are to strengthen the pillars of support for
entrepreneurs.

Author’s Note: The author thanks all interview partners for their willingness and
time to participate in this study. Further, the author is thankful for valuable
comments from Arun Mohan Sukumar, Gautam Chikermane, Niranjan Sahoo, as
well as two anonymous reviewers.

ANNEX
Methodology
Research Design and Data Collection
This study seeks to give a comprehensive overview on the current situation of
the Indian startup ecosystem. It provides an in-depth look at the following
questions:

 What are the core growth drivers and motivations of Indian founders to set up and run a startup? (Section 3)
 What are the core challenges that Indian startups struggle with? (Section 4)
 How has the startup ecosystem evolved? Where and what kind of support is available to startups? (Section
5)

To gather insights on these questions, a qualitative research design was chosen

and interviews with experts conducted. To qualify as an expert, interviewees
must have had significant professional experience in the Indian startup
ecosystem. For the data collection, interviews were conducted in the period
between February and April 2019. The researcher travelled to Bangalore,
Mumbai and the National Capital Region, where most interviews took place on
the premises of the startup support organisations. The face-to-face setting
allowed for a first-hand impression of the startup spaces as well as the working
atmosphere. Overall, 39 interview partners shared their perspectives.
The interviews were semi-structured, i.e. based on a list of guiding questions
respondents were asked to share their opinions. Thus, the interviews were
guided conversations, which gave interviewees the opportunity to answer openly
and also bring up new aspects, which the researcher had not considered before.
After each interview, the guiding questions were reviewed and, if necessary,
adjusted. The data collection was ended, when theoretical saturation[xlix] was
reached and no new major insights emerged. After the interviews, memos were
aggregated and insights were analysed to gain a comprehensive overview of the
developments in the Indian startup ecosystem.

In addition to the interviews, a literature review was conducted. The aim was to
identify relevant literature as well as data, which would provide deeper
background information on aspects raised by the interview partners. In addition,
such further information was helpful to strengthen the robustness of findings.

Description of the Sample

In order to strengthen the robustness of findings, we sought to capture a wide set
of opinions. Thus, a diverse group of experts was selected and interviewed. The
majority of interview partners were either startup founders or senior managers of
startup support organisations. The support organisations themselves are diverse
and the sample included academic, corporate, independent incubators and
accelerators, some hybrid organisations as well as one platform specifically
dedicated to supporting female entrepreneurs. The sample further included a
business school professor who teaches on innovation, as well as representatives
from industry associations, VC funds, angel investor networks, as well as a state
government initiative for startup promotion.

In regards to gender, 14 of the 39 respondents (35.9 percent) were women. In

addition, one non-Indian founder, who operates his startup from India, also
participated as respondent in this study. Almost half of the interviewees, 13 out of
27, were conducted in Bangalore, 9 in Mumbai and 5 in the National Capital
Region (NCR). Figure 1 provides a comprehensive overview of the types of
organisations and experts interviewed for the study.

The startups, whose founders participated in this study, were active in a variety
of sectors, as can be seen in table 1. While the initial focus of the study was on
technology-oriented startups, opportunities to interview a few non-tech ventures
emerged during the course of the study, which provided valuable insights.

Table 1: Overview of Interview Partners and Represented Organisations

I Interview
Organisation
n partner
t
e
r
v
i L
e G
o
w Sect Po e
c
or/E si n
Type a
xper tio d
n ti
tise n e
o o
r
. n

1 Private N Vario Pa M
incubato C us rt a
r/acceler R sect ne l
ator ors r e
with
hybrid
business
model
M F
a e
n m
ag a
er l
o e
p
er
a
 ti
o
ns

Pr
od F
Mobi
uc e
N le
t m
2 Startup C pay
m a
R ment
an l
s
ag e
er

Heal Fo M
N
Young th, un a
3 C
business nutri de l
R
tion r e

Cons
Pa M
N ultan
Young rt a
4 C cy
business ne l
R servi
r e
ces

5 Angel M Vario M
investor u us M a
network m sect l
an
b ors e
ai ag
er
in
ve
st
or
 re
la
ti
o
ns

Telec
om,
medi
a
Corporat M and
M
e u ente
CE a
6 incubato m rtain
O l
r/acceler b ment
e
ator ai ,
finte
ch,
retail
, etc.

M
ar
ke
tin M
g a
co l
ns e
ult
Academi M an
Diffe
c u t
rent
7 incubato m
sect
r/acceler b
ors
ator ai
Se
ni
or M
m a
a l
n e
ag
er
 A
ss
ist
an
t
M vi
Vario M
Angel u
8 investor m
us ce a
sect l
network b
ors e
ai
pr
es
id
en
t

M
an F
M
ag e
u
Educ er m
9 Startup m
ation pr a
b
od l
ai
uc e
t

1 Startup M Fo F
0 u Digi un e
m de m
tal
b r a
ai hos l
e
pital

man
age
men
 t

1 Academi M O
1 c u Clea ut
F
incubato m re
ntec e
r b ac
m
ai h, h
a
m
l
finte an
e
ag
ch er

IoT,
F
ICT M e
m
, a
a
med n l
e
tech a

, g

etc. er
b
u
si
n
es
s

e
c
o
s
y
st
e
 m

Re
gi
M
Vario on M
Industry u
1 us al a
associati m
2 sect m l
on b
ors an e
ai
ag
er

F
M
Wo Fo e
u
1 Young men un m
m
3 business hygi de a
b
ene r l
ai
e

Platfor
B
m for a F
women n Vario e
1 g us CE m
4 al sect O a
o ors l
entrepr r e
e
eneurs

1 Various B IT M
5 organisa a P a
tions n l
ar
g e
al tn
o
r er
e
an
d
 ad
vi
so
r
to

V
C
fu
n
ds
,
st
ar
tu
p

m
en
to
r

B
a
State n M
IT,
1 governm g He a
biote
6 ent al ad l
ch
initiative o e
r
e
 B
a
Private n Vario Pr M
1 incubato g us esi a
7 r/acceler al sect de l
ator o ors nt e
r
e

M
Le
a
Corpor ad
l
Clou er
ate e
B d
a com
incubat
n putin
1 or/ g g,
Se
8 al IoT,
ni F
o big
or e
r data,
acceler m m
e AI,
a a
etc.
ator n l
ag e
er

B
a
Pr
n M
Inno of
1 Business g a
vatio es
9 school al l
n so
o e
r
r
e

2 Startup B Finte Le
0 a ch ga M
n platf l a
g orm ad l
al vis e
o or
r
e

Fo M
u a
n l
 d
e
er

B
a
Cons
n Fo M
ume
2 g un a
Startup r
1 al de l
hard
o r e
ware
r
e

B
a F
n Net Fo e
2 g work un m
Startup
2 al ing de a
o app r l
r e
e

2 B Mobi F
3 Incubat a le A e
n apps m
or/accel ss
g a
erator al oc l
o e
run by r ia
e
industr te
y vi
associat ce
ion,

pr
and es
incubat id
ed en
startups t
 A
ss
is
ta
nt
vi F
c e
m
e a
l
e

pr
es
id
e
nt

Fo M
Mob un a
ility de l
r e

Foo
Fo M
d
un a
spec
de l
ialty
r e
app

Cro Fo M
wds un a
ourc de l
ing r e

Mob Fo M
ile un a
 de l
app
r e

Vi F
ce e
pr m
B esi a
a de l
n nt e
2 g Educ
Startup
4 al ation
o
r Fo
M
e u
a
n
l
d
e
er

B
a
n Mobi Fo M
2 g le un a
Startup
5 al gam de l
o es r e
r
e

B
a F
n HR Fo e
2 g tech un m
Startup
6 al platf de a
o orm r l
r e
e

2 Private N Diffe Pa M
7 incubato C rent rt a
r/acceler R sect ne l
ator ors r e
with
hybrid
business
A M
 n
a
al
l
ys
e
t
model

[1]
 In this study, the term ‘startup’ is used in orientation with the definition of the
federal government (Dwivedi, A. B.  (2016): The government has finally defined the
word ‘startup”; accessed: 23.09.2019). Accordingly, startups are understood as
entities, which are in the early stages of setting up their operations and work
towards innovation, development, deployment, and commercialisation of new
products, processes, or services driven by technology or intellectual property.

[2]
 An exit occurs when an entrepreneur sells his or her shares in the startup to
others (e.g. investors or another company).

[3]
 Fintech startups work in the field of emerging financial services technologies.

[4]
 A unicorn is a startup that reached a valuation of at least $1 billion.

Endnotes

[i]
 Inc42, “Indian Tech Startup Funding Report”, 2018.

[ii]
 “GDP (current US$) (annual %)”, World Bank, accessed August 26, 2019.

[iii]
 “GDP growth (annual %)”, World Bank, accessed August 26, 2019.

[iv]
 World Economic Forum, “Future of Consumption in Fast-growth Consumer
Markets: India,”2019.
[v]
 Vidisha Mishra, Terri Chapman, Rakesh Sinha, Suchi Kedia, and Sriram Gutta,
“Young India and Work: A Survey of Youth Aspirations ”, Observer Research
Foundation and World Economic Forum, 2018.

[vi]
 World Economic Forum, “Future of Consumption in Fast-growth Consumer
Markets: India,”2019.

[vii]
 Devina Sengupta, “Subscriber Base of Broadband to Grow 44%”, Economic
Times, January 1, 2018.

[viii]
 “Number of Internet Users in India From 2015 to 2023 (in Millions) ”, Statista,
accessed August 27, 2019.

[ix]
 “Pradhan Mantri Gramin Digital Saksharta Abhiyaan ”, accessed September 4,
2019.

[x]
 “Indian Business Prepares to Tap Into Adhaar, A State-Owned Fingerprint-
identification System”, Economist, December 24, 2016.

[xi]
 “India’s Digital Platforms: Stack’em High”, Economist, May 4, 2018.

[xii]
 Arvind Gupta and Philip Auerswald, “How India is Moving Toward a Digital-first
Economy,” Harvard Business Review, November 8, 2017.

[xiii]
 Inc42, “Indian Tech Startup Funding Report”, 2018.

[xiv]
 Inc42, “Indian Tech Startup Funding Report”, 2018.

[xv]
 “Startup India”, Government of India, accessed April 17, 2019.
[xvi]
 “#startupindia: The Status Report”, Startup India, accessed August 27, 2019.

[xvii]
 Ibid.

[xviii]
 The term was coined by Henry Chesbrough (“Open Innovation: The New
Imperative for Creating and Profiting from Technology” (Boston, MA: Harvard
Business School Press, 2003)) and refers to the notion that firms open their
innovation processes and integrate knowledge from external actors and sources
of innovation.

[xix]
 Tobias Weiblen and Henry Chesbrough, “Engaging with Startups to Enhance
Corporate Innovation,” California Management Review 57 (2015): 66-90; Thomas
Kohler, “Corporate Accelerators: Building Bridges between Corporations and
Startups,” Business Horizons 59 (2016): 347-357.

[xx]
 NASSCOM, “Co-Innovation: Enterprise Startup Collaboration”, 2019.

[xxi]
 “70% Indians Live in Rural Areas: Census”, Business Standard, January 20,
2013.

[xxii]
 Global Entrepreneurship Monitor, “2018/19 Global Report”, 2019.

[xxiii]
 “Angels & Demon: Decoding the Tax Row that’s Making Startups Nervous ”,
Economic Times, February 9, 2019.

[xxiv]
 Harichandan Arakali, “Startup Founders Cheer Withdrawal of Angel Tax; Say
Decision Will Boost Ecosystem”, Forbes India, August 26, 2019.

[xxv]
 NASSCOM, “Indian Tech Start-up Ecosystem, Approaching Escape Velocity,”
2018.
[xxvi]
 N. Balakrishnan, “InMobi: The Journey of India’s First Unicorn”, The Hindu
Business Line, March 18, 2019.

[xxvii]
 “The Global Unicorn Club: Current Private Companies Valued at $1b+ ”, CB
Insights, accessed August 26, 2019.

[xxviii]
 Ibid.

[xxix]
 NASSCOM, “Indian Tech Start-up Ecosystem, Approaching Escape Velocity,”
2018.

[xxx]
 “India’s Eight Biggest Employers”, Economic Times, June 29, 2015.

[xxxi]
 NASSCOM, “Indian Tech Start-up Ecosystem, Approaching Escape Velocity,”
2018.

[xxxii]
 Richard Florida and Ian Hathaway, “Rise of the Global Startup City: The New
Map of Entrepreneurship and Venture Capital,” 2018.

[xxxiii]
 Ibid.

[xxxiv]
 NASSCOM, “Indian Tech Start-up Ecosystem, Approaching Escape
Velocity,” 2018.

[xxxv]
 Ibid.

[xxxvi]
 Piet Hausberg and Sabrina Korreck, “Business Incubators and Accelerators:
A Co-citation Analysis-based, Systematic Literature Review,” Journal of
Technology Transfer, (2018); Susan Cohen, “What Do Accelerators Do? Insights
from Incubators and Angels”, Innovations 8 (2013): 19-25.
[xxxvii]
 Piet Hausberg and Sabrina Korreck, “Business Incubators and Accelerators:
A Co-citation Analysis-based, Systematic Literature Review,” Journal of
Technology Transfer, (2018).

[xxxviii]
 Sabrina Korreck, “Speedboating Into the Future – How Organizations Use
Open Foresight and Business Incubation as Strategic Means to Explore Trends
and Promote Innovation” (Dissertation, University of Hamburg, 2018).

[xxxix]
 Sabrina Korreck, “Women Entrepreneurs in India: What is Holding Them
Back?,” Observer Research Foundation Issue Brief, Forthcoming.

[xl]
 Nicholas Friederici, “Hope and Hype in Africa’s Digital Economy: The Rise of
Innovation Hubs,” in Digital Economies at Global Margins, edited by Mark
Graham (Cambridge, MA: MIT Press, 2019), 193 – 221.

[xli]
 Rosa Grimaldi and Alessandro Grandi, “Business Incubators and New Venture
Creation: An Assessment of Incubating Models,” Technovation 25 (2015): 111-
121.

[xlii]
 Sabrina Korreck, “Speedboating Into the Future – How Organizations Use
Open Foresight and Business Incubation as Strategic Means to Explore Trends
and Promote Innovation” (Dissertation, University of Hamburg, 2018).

[xliii]
 Richard Florida and Ian Hathaway, “Rise of the Global Startup City: The New
Map of Entrepreneurship and Venture Capital,” 2018.

[xliv]
 Inc42, “Indian Tech Startup Funding Report”, 2018.

[xlv]
 Ibid.

[xlvi]
 Ajit Balakrishnan, “Giving Wings to Startups”, Business Standard, May 3, 2019.
[xlvii]
 Sabrina Korreck, “Women Entrepreneurs in India: What is Holding Them
Back?”, Observer Research Foundation Issue Brief, Forthcoming.

[xlviii]
 Chamath Palihapitiya, “Bros Funding Bros: What’s Wrong with Venture Capital ”,
The Information, October 6, 2015.

[xlix]
 Barney Glaser and Anselm Strauss, The Discovery of Grounded Theory
(London: Weidenfield & Nicolson, 1967), 1–19.

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