Indian Startup Ecosystem:From Pre-Independence Era to the Present

70th Independence Day. From Subjugation to Freedom, India has gone through a harsh struggling phase before achieving the much needed liberalization. And none can deny this fact. India has been trying to establish itself among the best, regardless of the field. Taking one subset from the universal set, let’s see how independence has molded the startup culture in India. According to the 2014 NASSCOM report, the Indian startup ecosystem is the fastest growing and third largest startup ecosystem in the entire planet. If you are dubious whether startup culture really existed before independence, or it has gained momentum after liberalization, well, Indian entrepreneurship has a rich history.

Saurabh Srivastava said, “India has always been an entrepreneurial country. Barely 300 years ago, we accounted for 25 per cent of the global GDP, the same as China and Europe. Colonization kept us from the Industrial Revolution, reducing our share to 2 percent of global GDP by the time we gained independence.”

Entrepreneurship in India before Independence

The history of entrepreneurship is important worldwide including India. In the pre-colonial times, the Indian trade and business were prominent. Kanishka Empire in the 1st century started fostering Indian entrepreneurs and traders. Then came the Portuguese and the English who captured the Indian sea waters and slowly penetrated in the Indian business. They forced the entrepreneurs to become traders and they themselves took the role of entrepreneurs. This was the main reason for the downfall of Indian business in the colonial times.

Entrepreneurship during the British Colonial Rule was confined by social, cultural and religious acerbity. Lack of favorable laws, unsupportive political parties, instability in the political system and stringent tax policies restricted the growth of entrepreneurship. Furthermore a series of non-conducive economic factors did not let entrepreneurship take a strong and sharp move in India during British Raj. Moreover, the British showed no interest in advancement of learning in first stage of their rule in India. The education system lacked vigor and did not permit the rise of Indian Startup Ecosystem among the youth at that time.

In spite of these limitations, accidentally or knowingly, the East India Company seemed to play a vital role in the development of entrepreneurship among the youth in some sense. The popular Swadeshi Movement which involved boycotting British products and the revival of domestic products and production processes helped in the revival of Indian Startup Ecosystem.

The period between the world wars was marked by a considerable growth of entrepreneurship in India. The following years brought a number of opportunities in business that was effectively capitalized by the entrepreneurs. This coupled with a change in the attitude of the people, social reforms and emphasis on the education system broadened the vision for the Indian business class.

Thus, it is quite evident that the mindset of the people was completely different from the current scenario. The problems before independence and after independence have a huge deviation between them and it seems inappropriate to compare them. It existed with a different motive then, and has a new and different perspective now.

Acceleration of Indian Startup Ecosystem after Independence

Freedom performs great wonders. Rightly applicable to the startup ecosystem in India. The newly attained liberalization, along with the technological advances, more accessible resources, knowledge pool, massive funding, emerging global standards, thriving domestic markets, reduced communication gap geared the startup culture. Certainly, the list offers a conducive environment to turn the dreams of entrepreneurs into reality. The exceeding number of heads in India and the lack of employment opportunities and emphasis on the regional development encouraged entrepreneurship among the youth.

The entrepreneurs are trying to understand the common problems of today’s youth and solving it in the best possible way. In the last decade, factors like massive funding, consolidation activities, and burgeoning domestic market has metamorphosed the startup culture.

Timeline of the Indian Startup Ecosystem

1984: Prime Minister Rajiv Gandhi declared the “liberalisation of computer industry” removing rules & regulations imposed on the IT Industry.
1988: NASSCOM was started with 38 members.
1989: Canbank Venture Capital Fund, the first Public Sector Bank to setup a Venture Capital Fund.
1995: The dotcom era took a birth when VSNL launched the first commercial Internet service exposing Indians to the World Wide Web. Ajit Balakrishnan registered the first domain in India and launched Rediff.com. Shaadi.com, the first matrimonial website was launched in this year.
1997: ICICI Bank becomes the first bank in India to offer Net banking.
1999: The Indus Entrepreneurs (TiE), world’s largest network of entrepreneurs and a non-profit global community, initiated in Bangalore to promote entrepreneurship.
2000: Information Technology Act 2000 was passed. MakeMyTrip Limited founded and Rediff.com India Limited became India’s first dot.com company to be listed on Nasdaq.
2006: Info Edge went public, emergence of ventures like naukri.com and 99acres.com. followed by second generation startups like redBus, Infibeam and bookmyshow.com. The first cross-border VC – Nexus Ventures founded.
2007: Flipkart was founded.
2008: Morpheus, Zomato, and Quikr were founded.
2010: MakeMyTrip went public on NASDAQ. Also, Freshdesk, Ola, Snapdeal and Paytm were launched.
2011: Browserstack, Webengage, and Shopclues were founded.
2012: Housing.com and Jabong were founded. IndiaMART became the world’s second-largest B2B marketplace after Alibaba. Flipkart became the first India Unicorn.
2013: Amazon entered India. NASSCOM initiated its flagship programme NASSCOM 10,000 startups. Thinktank iSPIRT was also founded in the same year.
2014: Swiggy was founded. Ola & Snapdeal became Unicorns and Flipkart acquired Myntra.
2015: Infibeam went public in India and became the first ecommerce company to get listed in India. Paytm, Zomato & Quikr became unicorns. On 15th August 2015, our honorable Prime Minister Mr. Narendra Modi made a call to “Startup India, Stand up India”. His words were echoing the sentiments of today’s India.
2016: Shopclues joined the unicorn club. India is now the second largest Internet market in the world with 375 estimated users.

The way the Indian Startup Ecosystem has changed its course is worthy of notice. From 3,100 startups in 2014 to a projection of more than 11,500 by 2020, this is certainly not just simple growth or development. It’s a revolution, a massive revolution. And definitely, there’s much more to come!

Jai Hind!

-A proud Indian!

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Rashika Daga

Author at The Hacker Street

Engineer by mind, writer out of passion. An avid reader, keen observer and extremely enthusiastic in exploring new things. In a long term relationship with love and enjoyment.