See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/369365263

Growth of Indian start-up: A critical Analysis

Article · March 2023

CITATION READS
1 11,450

1 author:

Mallikarjun M. Maradi
Rani Channamma University Belgavi
41 PUBLICATIONS 25 CITATIONS

SEE PROFILE

All content following this page was uploaded by Mallikarjun M. Maradi on 19 March 2023.

The user has requested enhancement of the downloaded file.

JOURNAL OF MANAGEMENT AND ENTREPRENEURSHIP
ISSN : 2229-5348
UGC CARE Group 1 Journal
GROWTH OF INDIAN STARTUP: A CRITICAL ANALYSIS

Dr. Mallikarjun M. Maradi, Assistant Professor of Commerce, and Coordinator, Rani Channamma
University, PG Centre, Jamkhandi, Karnataka

Abstract:
India has emerged as the world’s second largest startup ecosystem next the US. India is a hotspot for
startup and spacing forward at an exponential rate. Bengaluru, Mumbai and Delhi are ranked amongst the
top 40 startup hubs across the globe in the Global Startup Ecosystem Report 2022. In 2021 alone, India
startups have raised more than $23 billion, spread over 1000+ deals, with 33 startups entering the coveted
unicorn club. So far 2022 has added 13 more startups to the unicorn club. The growing investor confidence
in Indian Startups is overwhelming and is seen gaining momentum across varied phases of growth in a
startup journey. Recent years witnessed a significant change in India’s entrepreneurial landscape from the
founding of new Startups to global investor interest, to the advances made in infrastructure and policies.
Thus, the research aims to explore the growth trend of new venture, determinants of startups and
vulnerable challenges for startups in Indian scenario. The study been carried out based on the secondary
data and used statistical tools for the data analysis and inference. The study found that the huge scale for
the startups in India and vulnerable challenges also impact on the growth of startups. The study also
focused further research areas in startups in India.

Keywords: Startup, growth and development, and Challenges of Startups in India.

Introduction:
India has emerged as the world’s second largest startup ecosystem next the US. India is a hotspot for
startup and spacing forward at an exponential rate. Bengaluru, Mumbai and Delhi are ranked amongst the
top 40 startup hubs across the globe in the Global Startup Ecosystem Report 2022. In 2021 alone, India
startups have raised more than $23 billion, spread over 1000+ deals, with 33 startups entering the coveted
unicorn club. So far 2022 has added 13 more startups to the unicorn club. The status of startups in the
world are developing a lot like the United States is the leading country, 7.1% of the startups in the world
in the Fintech industry, over 69% of the startup companies started as home businesses, and 60% of the
entrepreneurs entrusted in artificial intelligence. The current economic scenario in India is in expansion
mode. The Indian government is increasingly showing greater enthusiasm to increase the GDP rate of
growth from grass root levels with introduction of liberal policies and initiatives for entrepreneurs like
‘Make in India’, ‘Startup India’, MUDRA etc. In recent times, have seen a rise in entrepreneurs in the
country due to a boom in innovative ideas. By embracing innovation, startups can rise to the top of the
market. Therefore, the study has been conducted because of this kind of organic growth and improvisation
too place in entrepreneurial development.

Review of Literature:
Startup companies are newly born companies which struggle for existence. These entities are mostly
formed based on brilliant ideas and grow to succeed (Salamzadeh, A.; Kawamorita Kesim, H., 2015).
The conceptualization of start-up is based on western concepts and might be flawed and poorly applicable
to businesses in Kenya. Hence in the Kenyan context, a start-up should be viewed as an innovative
business entity, which is scalable and has survived up to 3-5 years (Beatrice K. Wanja W.; Stephen M.
2022). Startups are always looked having huge growth potential. But besides this, an entrepreneur has to
face tremendous challenges to transform that business idea into profit making company (Kurode, et. Al.

Vol. 17, No.1 (II), January - March 2023 181

JOURNAL OF MANAGEMENT AND ENTREPRENEURSHIP
ISSN : 2229-5348
UGC CARE Group 1 Journal
2016). Startups can have significant positive effects on employment and could rejuvenate industries with
disruptive strategies by new creation (Song et al, 2008; Acs and Armington, 2006). Startups contribute
to structural change by introducing new knowledge-intensive products and services (OECD, 2013). The
author explained about to assess the growth of start-ups in India and moreover how Artificial intelligence
can help this growth become a boom in entrepreneurial activities (Manu Tyagi 2019). Making capital
more accessible and cheaper, easier patent filing, giving research and development credits, and easier
entry and exits are critical to the success of Startup India (Dr.Shailja B., Vivek S. 2016). Paper stressed
on review of literature on startups in India, startup operating, factors responsible for motivation of starting
of startup, employments generation through the startup, impact of the startup policy on the startups, the
different finance facilities available, Problems encountered by startups in obtaining finance (Anubhab P.
and S.S. Pasumari (2020). The study reveals that all types of start-ups in India thereby aiming to give a
small push to new innovative businesses and provide them assistance in establishing their business (Dr.
Pooja H. R. 2017).
Research Gap:
A research gap identified that has not been answered by any of the existing studies or research within
startups and its proper growth in the field. Thus, many researches been carried out that hasn't been studied
at all regarding crucial issues relating to startups. Starting up a new business comes with mixed emotions
and efforts of the entrepreneurs. The study conducted here will discuss all such aspects related to Indian
startups, its contribution to economic growth and its unsustainability and how Indian economy has moved
further from self-reliance towards dependence. This does not augur well for the country’s future and
economists need to find new ways to address the problem of economic growth, development and self-
reliance. It’s every entrepreneur’s dream to help their business thrive and grow into at least a medium-
sized enterprise.
Research objectives:
1. To analysis the growth and development of Indian Startups in recent years.
2. To investigate the opportunities and vulnerable challenges faced startups in Indian scenario.
Hypothesis:
Ho1: There is no growth and development of India startups in India.
Ho2: There are no social, economic and financial challenges faced startups in India.

Research Methodology: The present study is analytical research in nature. The study attempts to analysis
the growth and potentials of startups in India, the opportunities and vulnerable challenges faced by the
budding business tycoons. The study is based on the secondary data which has been gathered from the
research papers, newspapers, magazines, books, journals, annual reports of Govt. of India, and authorized
websites.

Data Analysis: Transformation of startup into a successful magnates is not easy task. Many determinants
to be considered while starting a new ventures. The study comprised statistical data of startups in India,
ranks, and growth trend of entrepreneurial ventures. The study been used some statistical tools for the data
inference and analysis such as descriptive statistics, graphs and charts. The scope of the study also
confined to growth and development, opportunities and challenges of Indian Startups.

Background of the study:

Startups means a company in the first stages of operations. Startups are founded by one or more
entrepreneurs who want to develop a product or service for which they believe there is demand. The
startups are divided in various forms such as scalable, small business, lifestyle, buyable, big business,

Vol. 17, No.1 (II), January - March 2023 182

JOURNAL OF MANAGEMENT AND ENTREPRENEURSHIP
ISSN : 2229-5348
UGC CARE Group 1 Journal
offshoot, social and social startups. The State of the Indian Startup Ecosystem Report 2022, India will
have 250 unicorns by 2025, second only to the US. The startups helps in different forms such as agility,
team chemistry, less bureaucracy, competitive pricing and personality. The many research reveals that the
five components are very significant in business success like ideas, the team, the business model, funding
and time horizon. Three Indian cities are Bengaluru, Delhi and Mumbai made it to the list of top 40 startup
ecosystems in the world, according to The Global Startup Ecosystem Report of 2022 by Startup Genome.
Best industries for startups in India 2022
Fintech Real Estate B2B Software Delivery Service
Healthcare tech Big data Edtech Logistic
Supply Chain Management Virtual reality Ecommerce
Artificial Intelligence Leisure & Entertainment Shared mobility

Opportunities of startups in India:

OPPORTUNITIES FOR STARTUPS
Large population More opportunities to learn. More Benefits
Developing new operations Flexible hours Connectivity
Tax saving for investors Unique experience Reduction in cost
No time-consuming compliances Increased job satisfaction Easy exit
Unsure job security Minimal supervision Cheaper patent costs
Self-reliant Opportunities for innovation Innovation Society
Tax holiday for 3 Years and Change of Mind Set of Working Simple process and
Apply for tenders Class Easy access to Funds

VULNERABLE CHALLENGES FACED BY STARTUPS IN INDIA

VULNERABLE CHALLENGES
Revenue Generation Uncertain job security Less pay
Supporting Infrastructure A heavy workload Long hours
Financial Resources Lack of structure Planning ahead
Creating Awareness in Markets Constant change The right systems
Government Policies Limited resources Skills and attitudes
Too much freedom Hiring Suitable Candidates Problem solving
Unrealistic Expectations a lack of research Welcoming change
Partnership Decision Making being in the wrong market Money running out
Financial Management Keeping up with the market bad partnerships
Teamwork and delegation Cash flow & financial management Ineffective marketing

Table 1 Exhibits that the Startup Index of Nations and Regions

Ranking Of Countries On Ranking Of Countries Ranking Of Ranking Of Regions
Share Of Billion Dollar On Share Of Value Regions On Share On Share Of Value Of
Startups (Unicorns) Of Billion Dollar Of Billion Dollar Billion Dollar Startups
Startups (Unicorns) Startups (Unicorns) (Unicorns)
Rank Country Share of Country Valuation Region Share of Region %
Unicorns of Unicorns Valuation
Unicorns of
Unicorns

Vol. 17, No.1 (II), January - March 2023 183

JOURNAL OF MANAGEMENT AND ENTREPRENEURSHIP
ISSN : 2229-5348
UGC CARE Group 1 Journal
1 United 64.7% United 63.3% Silicon 39.2% Silicon 45.0%
States States Valley Valley
2 China 13.8% China 21.7% New 9.4% Beijing 15.4%
York
3 India 4.1% India 4.7% Beijing 6.4% Los 7.6%
Angeles
4 United 2.5% Sweden 2.2% Los 5.1% New York 5.3%
Kingdom Angeles
5 Singapore 2.2% Germany 1.5% Boston 4.0% Bangalore 3.0%
Source: USC Marshal School of Business.

The above table inference that the rank of startups by country and region at the global level, India has 3rd
rank with 4.1% of share of unicorns, in the valuation of unicorns 4.7% and ranking of region on share of
value of billion dollar startups Bangalore has at 3% (5th Rank). Henceforth, Indian startups are very
significant at the global scenario.
Table 2 exhibits the Startup recognized and job creation during 2016 to 2020 in India
Year Startups Job creation
2020 14700 1.7 lakhs
2019 11701 1.5 lakhs
2018 8947 0.96 lakhs
2017 5425 0.49 lakhs
2016 504 10 for 1 startup
Source: Ministry of Commerce and Industry, GoI, 2020
The above table inference the recognition and job creation from startups in India during 2016 to 2020, in
2020, startups recognized 14700 and created 1.7 lakhs and more jobs. In 2019, 11701 startups and 1.5lakhs
jobs created and 8947 startups and 0.96 lakhs jobs has been created in various sectors in 2018. Startup
Ecosystem in India. India has emerged as the 3rd largest ecosystem for startups globally with over
77,000 DPIIT-recognized startups across 656 districts of the country as of 29th August 2022
Highlights of the startup in India
 India has the world’s second-biggest fintech hub with more than 2,565 startups operating currently,
there were only 737 in 2014. India’s largest share from fintech startups is through ‘payments’ and
is followed by lending, wealth tech, personal finance, insurtech, regtech and others.
 The impact of India startup on the economy such as 2nd highest no. of internet users in the world,
3rd largest startups ecosystem in the world in terms of unicorns and total no. of startups, 61% of
the internet penetration, 373 Million+ rural internet users, $450 bn+ combined valuation of Indian
startups, 7.7 lakhs job creation, and $ 131 bn+ venture capital inflow since 2014(Startup Report-
2022).
 As on 30th July 2022, of the corpus of Rs. 945 crore, Rs. 375.25 crore have been approved to 102
incubators under the Startup India Seed Fund Scheme (SISFS).
 As per International Data Corporation (IDC), a global provider of market intelligence and advisory
services, the overall Indian public cloud services market is expected to grow at a CAGR of 24.1%
for 2020-25 to reach $10.8 billion by 2025.
 As per the latest report by International Data Corporation (IDC), India Artificial Intelligence
Market, 2021, India’s AI market is expected to reach USD 7.8 billion by 2025.

Vol. 17, No.1 (II), January - March 2023 184

JOURNAL OF MANAGEMENT AND ENTREPRENEURSHIP
ISSN : 2229-5348
UGC CARE Group 1 Journal
 The e-commerce sector has the lion's share of India's unicorns with 23 startups achieving this
status as of May 2022. Reporting by Inc42 shows that four out of the 10 fastest Indian unicorns
are from the e-commerce sector.

Indicators of Growth in the startup:

 The pace of growth in the startup ecosystem has increased to 15% year-on-year in 2018, while the
growth of the number of incubators and accelerators has grown to 11%
 Significantly, the number of women entrepreneurs stood at 14%, up from 10% and 11% in the
previous two years.
 Startups in the country have been able to create an estimated 40,000 new jobs over the year, taking
the total jobs in the start-up ecosystem to 1.6-1.7 lakh
 Bangalore has been listed within the world’s 20 leading startup cities in the 2019 Startup Genome
Project ranking. It is also ranked as one of the world’s five fastest growing startup cities.
 The Indian startups have gone on to raise sizeable ticket sizes from various global and domestic
funds. The top 15 deals constituted about 40% of total deal value, demonstrating that most funds
are valuing deal quality more than quantity.
 Support of Corporate Connect and Government Support: Enterprises are realizing the disruptive
potential of start-ups and are thus, partnering/investing in them. Government of India is
understanding the value of working with disruptive innovators across the value chain and using
their innovations to improve public service delivery.
Conclusion:
Startups are one of the significant ways to solve the critical problems humanity is facing due to the react
much faster to problems and can innovate solutions. A rising no. of incubators and a steady inclination of
young people towards starting their own ventures is also propelling the entrepreneurship and early stage
startup in India. While the world-changing potential in startups is sometimes overhyped, successful
startups do have the potential to create a significant positive impact on the world. And even when startups
fail, they still have an impact, especially through the learnings for the founders, employees, investors and
other stakeholders. Startups are the future of employment. The traditional career path has changed, and
people are increasingly taking on temporary or freelance work with startups instead

Reference:
1. Salamzadeh, A., & Kawamorita Kesim, H. (2015). Startup companies: Life cycle and challenges. 4 th
International conference on employment, education and entrepreneurship, Belgrade, Serbia.
2. M. H. Bala Subrahmanya (2018), How Distinct is Technology-Based Startups in India? Features,
Policies and Evolving Ecosystems, Asian Journal of Innovation and Policy, pp. 30-54.
3. Sarika Sharma, Mrinal Raj & Tanya Gandhi, Challenges and Issues Faced by Startup Companies in
India, AIMS, ISBN 978-1-943295-11-1, pp. 109-113
4. Uruba Andaleeb & Dr. S.D. Singh (2016), A Study of Financing Sources for Start-up Companies in
India, International Review of Business and Finance-Research India Publication, ISSN 0976-
5891, Vol-8 (1), pp. 1-4.
5. Beatrice K. Wanja W. and Stephen M. (2022). A theoretical route towards conceptualization of start-
ups in emerging markets: A Kenyan perspective, Research in Business & Social Science, Vol-
11(4), pg-448-457.
6. Fahmeeda F.Shaikh(2019), Start- Up In India: Prospects , Problems and Plans, An International Peer-
Reviewed Open Access Journal of Interdisciplinary Studies, Vol-II(1) ISSN: 2581-5628, Pg-79-
84.

Vol. 17, No.1 (II), January - March 2023 185

 JOURNAL OF MANAGEMENT AND ENTREPRENEURSHIP
ISSN : 2229-5348
UGC CARE Group 1 Journal
7. Dr Mallikarjun Maradi; Santosh Doipude (2020), Threats and Opportunities for Entrepreneurs
Development: An overview, published by Grab Educational Charitable Trust, Chennai, pp-219-
227.
8. Kurode, Tanay and Kurode (June 2016), Apoorva Vasani and Moitra, Kunal, A Study of Critical
Challenges in Startup Management.
9. Acs, Z J and C Armington (2006): Entrepreneurship,Geography and American Economic, Growth,
Cambridge, UK: Cambridge University Press.
10. Halajole Sachin; Dr. Maradi Mallikarjun(2020). Problems and Prospects of Women Entrepreneurship
Development: A case of Vijayapur and Bagalkot Districts, Edited book-Women Entrepreneurship
and Development: Issues and Challenges, published by Grab Educational Charitable Trust,
Chennai, pp-351-359.
11. Dr Mallikarjun Maradi; Santosh Doipude (2020), Threats and Opportunities for Entrepreneurs
Development: An overview, published by Grab Educational Charitable Trust, Chennai, pp-219-
227.
12. OECD (2013): Start-up Latin America: Promoting Innovation in the Region, Paris: Development
Centre Studies, Organisation for Economic Cooperation and Development.
13. Manu Tyagi (2019), Overview Of Startups Policies In India- With Special Reference To Artificial
Intelligence, An International Peer-Reviewed Open Access Journal of Interdisciplinary Studies,
Volume: II, Issue: 1, ISSN: -2581-5628, Pg-135-142.
14. Dr. Pooja H. Ramchandani (2017), A descriptive study of opportunities and challenges of Startup India
Mission, Vol-2 Issue-3, ISSN(O)-2395-4396, Pg-61-65. C-1440 www.ijariie.com
15. Dr.Shailja B., Vivek S.(2016). Startup India- New Opportunities for the Entrepreneur, 3rd International
Conference recent Innovations in Science, Engineering, and Management, Conference
Proceeding, Pg-1473-1476.
16. Anubhab P. and S.S. Pasumari(2020), Opportunities and Challenges in Financing of Startup
Enterprises in the State of Odisha: A Literature review.

Vol. 17, No.1 (II), January - March 2023 186

View publication stats