Empowering India’s Startup Ecosystem – Reflections on Nine Years of Startup India
The mighty United States has maintained its economic superiority through cycles to my mind only for one key reason: its dominance in business and innovation. The US has grown consistently over 25% year-on-year due to its focus on startups and technology. India’s ambition to become a $10 trillion economy rests significantly on the contributions of its startups, a vision deeply aligned with the goals of the Startup India initiative launched in 2016, by our Hon’ble Prime Minister Shri Narendra Modi. As agile entities capable of rapid adaptation, startups are driving job creation, wealth generation, and innovation at an unprecedented pace. As we mark nine years since the launch of the Startup India initiative, it is a moment to reflect on how far the entrepreneurial ecosystem has come and how much potential still lies ahead.
Startups: The Engine Driving Job Creation in Emerging Sectors
Startups have proven instrumental in generating new jobs across emerging sectors, while legacy companies primarily create replacement roles. For example, the quick commerce sector alone has added tens of thousands of jobs in recent years, exemplifying the transformational employment impact of startups. Over 1.58 lac startups are now registered under DPIIT, collectively responsible for creating over 15.5 lakh jobs—a testament to their central role in reshaping the employment landscape in India.
Innovation, too, is spearheaded by these ventures. Unlike legacy firms, startups introduce entirely new business categories, fueling competition and progress. Their success is evident in the rising number of IPOs, with companies like Zomato listing on the BSE and InfoEdge achieving NIFTY 50 status, showcasing the potential of venture-backed firms to redefine India’s economic narrative.
A Decade of Make in India: A Launchpad for Startups
The last year also marked a decade for the revolutionary ‘Make in India’ initiative launched by our Hon’ble PM in 2014, which has created a highway of opportunities for Indian founders to showcase their potential on a global stage. Today, home-grown Indian products and services are competing head-to-head with international peers, growing faster than ever, and taking the world by storm.
From an investment standpoint, we have witnessed the ‘Indian Growth Story’ expand into exciting new ideas, bringing to life brands that consumers absolutely love. The schemes like “Fund of Funds for Startups,” by the government have been instrumental to provide financial assistance to startups, enabling them to access capital for growth and expansion. This initiative has been a game changer in accelerating India’s digital infrastructure, lowering entry barriers for startups, and enabling them to scale and innovate at lightning speed. The opportunity to build world-class, sustainable businesses is now bigger than ever before.
Scaling Indian VCs: Building a Stronger Startup Ecosystem
The role of venture capital in this ecosystem cannot be overstated. Globally, the top five U.S. companies were all venture-backed, underscoring VC’s critical contribution to scalable innovation. In India, the growth of VCs has mirrored the expansion of Startup India, fostering a robust ecosystem that empowers entrepreneurs with both funding and strategic guidance.
The Shift to Domestic Venture Capital: A New Era of Growth
As the foreign venture capital world shifts and changes, to me it is evident that the next generation of Indian companies are going to be built with the support of Indian capital. The emergence of strong domestic brands in the VC space is a great start. And most of them have raised capital from Indian institutions and family offices. The focus of Indian family offices too towards investing in startups is a step in the right direction. No country in the world has or can build a large startup ecosystem without domestic capital.
Domestic VCs have a great opportunity to build an ecosystem that showcases the best-in-class way of doing business. The emergence of domestic VC brands is a good sign of the robustness of our ecosystem. The next step is to make deeper pools of LP capital available as well as other enabling policies to domestic VCs so that this gets bigger and bigger. The more risk capital available to our founders, the bigger the pie becomes for everyone.
India now boasts the world’s third-largest startup ecosystem, poised to sustain an impressive annual growth rate of 12-15%. Recognizing the transformative power of disruptive innovation, the Government of India and policymakers have actively engaged with startups across the value chain, leveraging their ingenuity to enhance public service delivery and providing unwavering support to nurture the ecosystem.
The Indian startup journey is not just a success story in the making—it is a testament to the impact of collaboration among visionary founders, forward-thinking policymakers, and strategic investors. Together, they are building a legacy of sustainable growth and innovation. With sustained focus and strategic partnerships, these ventures are set to drive India’s economic transformation, cementing the nation’s position as a global innovation powerhouse.
Writer : Archana Jahagirdar, Founder and Managing Partner, Rukam Capital
