An Imbalanced Ecosystem

The rapid development of various institutions supporting company creation in India has the potential to generate economic growth, innovation, and economic development. However, this article shows that the start-up ecosystem has unevenly developed across cities and economic sectors, and has failed to empower the overall population, so far. Using a comprehensive database on start-ups retrieved from Tracxn, a business data and analytics company, the authors find that venture capital concentrates amongst graduates stemming from a handful of prestigious education institutes in India and abroad. The article analyses the role of entrepreneurship policies and argues for a shift of focus and resources towards the building of a more inclusive start-up ecosystem.

The term “start-up” has now become a vital part of the lexicon of policymakers globally. It is oft-used along with the terms like “jobs,” “innovation” and “growth.” Introduced in the 1970s by the business journalists in the United States (US), the term initially referred to “innovative and rapidly emerging” companies in the field of electronics and communication, created by youngsters in Boston’s Route 128 and the Silicon Valley. However, these start-ups have come a long way since then. Giants like Google, Apple, Facebook, Amazon, Microsoft, Netflix, Airbnb, Tesla, and Uber that dominate the internet today were once started by youngsters in college or out of their parents’ garages.

These success stories spilled out to India as well, where the instances of Azim Premji (Wipro) or N R Narayana Murthy (Infosys)—both of whom emerged from Bengaluru, “India’s Silicon Plateau,” in the 1980s—inspired many. The example set by these high-tech companies was steadily emulated by their counterparts in other metro cities of the country like Mumbai, Delhi, Chennai and Hyderabad. The phenomenal rise of Flipkart, Snapdeal, Ola, and Paytm, the famous Indian “unicorns,” along with a multitude of young companies, has set an example for millions of Indians, who have been conventionally looking for professional opportunities in one of the most saturated job markets in Asia (UNDP 2016).