In view of the emerging importance of the startup sector in the Indian economy, the Reserve Bank of India (RBI) conducted a pilot survey on Indian startup sector during November 2018 to April 2019. Responses were received from 1,246 startups.
This pilot survey shed light on certain important aspects of the startup sector in the Indian economy. Participants reported market/industry demand and team experience as the most important factors for setting up the startups. Data and analytics, health, education and agriculture were major startup sectors in the country. Some of the constraints cited by the startups pertained to access to new markets, finance and lack of skilled labour/technology/talent/distribution channel. Future plans of the startups included hiring staff for supporting business expansion, getting listed on the Indian stock exchanges and seeking acquisition, among others.
Nearly three-fourths of the participants were from the states of Karnataka, Maharashtra, Telangana, Delhi and Tamil Nadu, indicating large concentration of the startup sector in India in a few states. Nearly 86 per cent of the participating startups were private limited companies.
Nearly 88 per cent of the founders had academic qualification of at least a bachelor’s degree. Over 10 per cent of the founders were below 25 years of age and another 55 per cent were in the age group 25 to 40 years. One third of the founders had academic background in engineering. A majority of the founders had professional experience and 7.3 per cent of the founders were still students.
Startups worked in diverse areas of activities, where emerging sectors had a fair share. Data analytics was the leading sector followed by health, education and agriculture.
Around a third of the startups used online marketing, big data analytics, machine learning and internet of things (IoT) for their business. Most of the respondents targeted business to business (B2B) and business to consumer (B2C) channels for selling their products.
Families & friends emerged as the largest source of funding (around 43 per cent), apart from own funds. About 13 per cent of the startups received international funding.
Over three-fourths of the startups had up to one crore rupees of capital investment, whereas around 41 per cent infused capital up to Rs 20 lakhs each. On the other hand, nearly 5 per cent startups infused capital above Rs 10 crore each.
Almost a half (49 per cent) of the respondents informed that they were in early stage of revenue generation while another 31 per cent were in growing stage. Of the remaining startups, which were yet to generate any revenue, as high as 86 per cent were aged below three years.
Almost 58 per cent of the startups had plans to get listed on the Indian stock exchanges in the next five years. Most of these startups were in health, software development, IT consulting/solution sectors and were of age less than three years.