India rockets to fourth place globally in $50 mn-plus VC investments for start-ups

India ranks fourth globally in terms of start-ups that have secured over $50 million in disclosed venture capital (VC) investment, shows a new report put out by the policy advisory and research firm Startup Genome. As per the list, India's position is only surpassed by the US, China, and the UK. 

Scaleup Success in India 

The report reveals that India boasts 429 scale-up companies with a total VC investment of $127 billion and a cumulative tech value investment of $446 billion. India also surpassed the UK in both total VC investment and the cumulative tech value investment of these scale-up firms. 

Notably, a significant portion of Indian start-ups cater to a global audience, with over 50 per cent of their customers hailing from regions outside of Asia. 

Local vs. Global Focus 

The report sheds light on why start-ups in certain countries tend to concentrate on local markets rather than expanding globally. It notes that start-ups in large countries, excluding the US, tend to scale more effectively when they focus on their domestic markets. The sheer size of the domestic market often justifies delaying or bypassing international expansion. 

India's Success in B2C Start-ups 

This approach particularly holds true for Business to Customer (B2C) start-ups in India. Many successful start-ups in the country have achieved unicorn status and billion-dollar exits without venturing beyond India's borders. 

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 above experience a 5.1 per cent scale-up rate, compared to 3.8 per cent for those with a score of 2 to 4—an impressive 34 per cent 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. 

Global Connectedness Matters 

Furthermore, the report underscores the importance of global connectedness. Start-ups that cultivate a strong 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 like Silicon Valley, New York City, and London witness their start-ups expanding internationally at a significantly higher rate, with a strong 66 per cent correlation between these variables. 

About the Report 

The Startup Genome's Scaleup Report is a comprehensive study that analyzes the factors, behaviors, resources, and characteristics contributing to the success of scaleup start-ups. It distinguishes between start-ups that achieve $50 million in four to eight years and those that do not.