India has secured the fourth position globally concerning start-ups that have garnered over $50 million in disclosed venture capital (VC) investment, according to a recent report by Startup Genome, a policy advisory and research firm. India’s position in this ranking places it behind only the US, China, and the UK.
Impressive Scaleup Achievements in India
The report showcases India’s impressive scale-up achievements, with a total of 429 scale-up companies having attracted $127 billion in VC investment and boasting a cumulative tech value investment of $446 billion. Notably, India has also outperformed the UK in terms of both total VC investment and cumulative tech value investment by these scale-up companies.
Global Appeal of Indian Start-ups
A significant proportion of Indian start-ups have a global customer base, with more than 50% of their customers located outside of Asia.
The report delves into the reasons why start-ups in certain countries tend to focus on local markets rather than pursuing global expansion. It points out that start-ups in large countries, excluding the US, often experience more effective scaling when they concentrate on their domestic markets. The sheer size of the domestic market frequently justifies delaying or forgoing international expansion efforts.
This approach is particularly relevant for Business to Customer (B2C) start-ups in India, where numerous successful ventures have achieved unicorn status and billion-dollar exits without venturing beyond the borders of India.
Introduction of the “Local Connectedness Index”
The report introduces the concept of the “local connectedness index,” which measures the size, density, and quality of a start-up’s local network. Start-ups with a local connectedness index score of 6 or higher experience a 5.1% scale-up rate, compared to 3.8% for those with a score ranging from 2 to 4—an impressive 34% boost. The study also highlights that early-stage start-ups with a higher local connectedness index witness their revenue growing twice as fast as those with a lower index.
The Significance of Global Connectedness
Furthermore, the report underscores the importance of global connectedness. Start-ups that cultivate a robust global network have a 3.2 times higher likelihood of achieving scale compared to those with limited international connections. Ecosystems that are more intertwined with top global hubs such as Silicon Valley, New York City, and London observe their start-ups expanding internationally at a significantly higher rate, with a strong 66% correlation between these variables.
About the Report
Startup Genome’s Scaleup Report is a comprehensive study that analyzes the factors, behaviors, resources, and characteristics contributing to the success of scale-up start-ups. It distinguishes between start-ups that achieve $50 million in four to eight years and those that do not.