Startups in India rise three-fold in 5 years; Maharashtra, UP, Gujarat lead

The number of entities recognised as startups by DPIIT has grown by 193% (almost three-fold) over the past five years, reaching a tally of 1,52,139 government-recognised startups as of October 31, 2024, according to the latest government data.

The state or UT-wise details of recognised startups in the last five years show India recognised 11,885 entities as startups in 2019; 14,852 in 2020; 20,282 in 2021; 26,596 in 2022; and 34,842 in 2023.

As of 2023, Maharashtra had the highest number of 5,816 startups, followed by Uttar Pradesh at 3,432 and Gujarat at 3,295. Interestingly, Delhi (3,161), Karnataka (3,036), and Tamil Nadu failed to secure a place in the top three in 2023.

Under the Startup India initiative, which was started in January 2016, the government implements three flagship schemes -- Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) -- to support startups at various stages.

FFS catalyses venture capital (VC) investments and is operationalised by the Small Industries Development Bank of India (SIDBI), which provides capital to Securities and Exchange Board of India (SEBI)-registered alternative investment funds (AIFs) that further infuse money in startups. Such AIFs are required to invest at least two times the amount committed under FFS in startups.

The total investments made in startups by selected AIFs have risen manifold to ₹20,572 crore as of October 31, 2024, up from ₹3,366 crore in 2023 and ₹5,974 a year before, shows the government data. In terms of AIF investments, Karnataka topped at ₹6,517 crore so far this year, followed by Maharashtra at ₹4,825 crore and Delhi at ₹3,043 crore.

SISFS, which provides financial assistance to seed-stage startups through incubators, also saw the total funding approved to startups by selected incubators rise to ₹454.04 crore as of October 31, 2024. Maharashtra (₹82 crore), Karnataka (₹72 crore) and Tamil Nadu (₹41.35 crore) were in the top three.

Under the CGSS scheme, which enables collateral-free loans to startups through eligible financial institutions, the total loans guaranteed to startups as of October 31, 2024, stand at ₹555.24 crore, nearly double from ₹281.49 in the full last year (2023).

The government says it does not have data on the success rate of startups in terms of survival and revenue generation as such information is not centrally maintained. "The startups and scale-ups (established startups) are more accurately measured by failure or success in a particular phase making it difficult to put together a statistic covering all types of new businesses and their success or failure rate with any level of accuracy," Ministry of commerce & industry MoS Jitin Prasada stated in the Lok Sabha.

Women-led startups on the rise

The number of entities recognised as startups with at least one woman director in a startup stood at 17,033 as of the year 2023, the government data shows. The number went up from 12,866 in 2022 and 10,192 in 2021. Again, Maharashtra (2,916), Uttar Pradesh (1,784) and Karnataka (1,502) topped the women-led startup list in 2023.

Of the total of 1,52,139 startups India has produced so far, 14,353 are those in technology sectors, with at least one woman director. As of October 31, 2024, the number of recognised tech startups with at least one woman director stood at 3,442, while the number was 4,353 in 2023, according to the central government data.

As of 2023, IT services (1,802) emerged as the top field for women-led startups, followed by healthcare & life sciences (1,762) and agriculture (1,103). The data on investments made by selected AIFs in startups led by women as of October 31, 2024, shows 149 entities received ₹3,107.11 crore. A total of 1,278 startups received seed funding worth ₹227.12 crore under the SISFS scheme. The government guaranteed around 18 loans under CGSS for women startups and disbursed a total of ₹24.6 crore.

Notably, to promote the flow of both equity and debt to women-led startups, 10% of the fund in the 'Fund of Funds for Startups Scheme', operated by SIDBI, is reserved for women-led startups. AIFs led by women are also eligible for a higher level of management fee (0.1% p.a.). The same benefit is also extended to AIFs, which are focused on women-led startups.