‘Funding to fall, but startups to surge’

Indian startups’ funding could drop by 20-30% to around $3.8-4 billion in 2016 from around $4.9 billion in 2015, said a Nasscom report that was released on Wednesday.

However despite funding challenges, Indian startups are expected to grow 2.2 times to over 10,500 businesses over the next four years. In 2016, startups are set to grow at 8-10%, said the report, “Indian Start-up Ecosystem Maturing - 2016”, released on the sidelines of Nasscom Product Conclave 2016 in Bengaluru.

With over 4,750 startups at present, India ranks third in the world after US (~50,000) and UK (₹5,000).

While funding in money terms is a challenge in the current market scenario, the number of startups funded during 2016 is estimated to increase by 8% to 650, while the average ticket size (what each startup gets) will drop by 25% to $6 million in 2016 from $8 million in 2015.

R Chandrashekhar, president, Nasscom, said, “Technology startups are creating a new identity for India and its technological prowess. They are defining the way the world operates making life better and easier for people and businesses alike.”

The report also said that nearly three quarters of the headquartered based in Bengaluru, Mumbai and National Capital Region. The current “mortality rate” or those that do not survive is around 18-22%,which is within acceptable limits, the report said.

India will become home to over 10,500 startups by 2020, employing over 210,000 people reveals the report from around 100,000 people now.

Fintech, healthtech and edutech are the three largest domains that saw the most number of startups in the country.