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February 2, 2022

Tech start-ups in India boosted by record investment

Investment in Indian start-ups surged in 2021, with more than 10,000 created in the past year.

By Afiq Fitri

India’s digital sector is booming off the back of record investments and a bumper crop of new start-ups that launched in 2021, according to the government’s latest economic survey published yesterday. As the country enters negotiations with the United Kingdom on digital trade, businesses looking to tap into the tech sector in India should take note of these developments but beware of intellectual property issues in the country.

In 2017, only 121 districts in India – out of 644 across the country – had at least one start-up registered. As of January 2022, there were 61,400 start-ups across 555 districts in India, with 14,000 created last year alone. 

The main driver of this growth is the government’s Startup India initiative. Launched in 2016, the programme is designed as a national incubator providing seed funding for early-stage companies and follow-on venture capital investment for high-growth businesses. By tapping into the country’s vast pool of digitally skilled citizens, the state-backed initiative has borne fruit for the tech sector in India.

Tech start-ups in India: a record year for unicorns

One of the companies that have emerged from India’s booming start-up ecosystem is the edtech giant Byju’s, an interactive learning service underpinned by animated storytelling. While the platform was originally designed to help Indian students in the country’s notoriously competitive national exams, Byju’s is now setting its sights on the international edtech market after it raised $460m last year. 

More success stories may soon arrive. In January 2022 alone, Indian start-ups received investments of around $4.6bn across 196 deals, a near fivefold year-on-year increase. The food delivery service Swiggy raised a total of $700m, while Fractal Analytics, an artificial intelligence service platform, received $360m in funding. 

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This surge in funding has translated into a “record number” of 44 start-ups achieving unicorn status in 2021, according to the government’s economic report. Data from Beauhurst and CB Insights also shows that India now has more unicorns than the UK, and currently sits behind the United States and China in terms of total unicorns created. 

However, these rosy statistics are tempered by intellectual property (IP) issues and the time taken to approve patents, both of which were highlighted in the economic report as a potential barrier to tech innovation. While the number of patents filed in India has increased generally, it takes 42 months to receive a final decision for a patent, more than twice the amount of time in the US. 

The report suggested hiring more patent examiners and introducing a time limit for patents to be approved, which would align the country's IP policies with the US and China.

Home page image by xavierarnau/iStock

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