Did you think Bengaluru is the Indian startup founder's favourite city? Think again

Sceptics called it a bubble; realists called it survival of the fittest. New sectors emerged, metros grew as IT hubs, and foreign money flowed in. In fact, it seems like the Indian startup ecosystem has grown from infancy to toddlerhood in a few short years.

Although Bengaluru has long been considered  India's answer to the Silicon Valley, there is now a new favourite city for startups: Delhi beat Bengaluru and Mumbai to top their list for starting new ventures. An industry-wise analysis revealed that irrespective of funding stage, consumer Internet and e-commerce are the most popular segments. The 'India Startup Outlook Report 2016' released by InnoVen Capital, a venture debt and speciality lending business, has unearthed various facts and quirks of the Indian startup ecosystem.

In a country of a billion people, unemployment is a perpetual problem. However, the starting up trend is to stay, it seems, and this means creation of more jobs. The study also states that more than 5,000 jobs are expected to be created by about 130 startups in the next 12 months. About 97 per cent startups felt they were likely to hire new employees, with an average 28 per cent on the technology front.

Source: InnoVen Capital's ‘India Startup Outlook Report 2016’

The State authorities are also coming in to the picture for developing the startup ecosystem. The ‘Startup India Stand up India’ campaign, which was launched last month, has given hope to entrepreneurs and investors alike. The InnoVen study found that 65 per cent of all companies felt current business and political conditions are better than last year and 76 per cent expect next year to be even more favourable for startups.

Ajay Hattangdi, Group COO and CEO India, says that the report has revealed an optimistic and upbeat sentiment within the Indian startup environment. He adds, “We are privileged to have a unique ring-side view into the venture ecosystem as it has matured over the years. By distilling that knowledge gained through the years into reports and research studies, InnoVen Capital hopes to share some of those insights with other fellow participants, many of who have contributed to the building and nurturing of the Indian startup ecosystem.”

Although there has been cynicism about few startups making profit so far, the report says that in FY 2016 more than 50 per cent of bootstrapped startups and 45 per cent of angel-funded startups are expected to turn profitable, whereas only 22 per cent of VC-funded companies are expected to turn profitable. Despite the challenges in taxation and regulations, it says, 130 companies would raise $700 million this year.

Graphics by Gokul K & Aditya Ranade