TheEconomistMarch 14th 2020 491W
hen itinerantventure capitalists
land at Delhi airport, many head
straight to Aerocity, a new development of
glass, steel and Starbucks next door that
would not look out of place in Silicon Val-
ley, Singapore or Shanghai. Cyber City, an-
other tech enclave 20 minutes away by
Uber (traffic permitting), swarms with
young programmers in t-shirts and jeans
not unlike the Stanford students plotting
the next disruptive app at Philz Coffee in
Palo Alto. Many are one and the same.
What Delhi’s tech parks lack in the
splendour of India’s historic business hub,
in south Mumbai, they make up for in un-
potholed roads, uninterrupted mobile con-
nections and stable broadband. Between
2017 and 2019 the capital spawned 2,562
startups, according to Tracxn Technol-
ogies, a data provider. Other clusters, nota-
bly in Bengaluru, Mumbai, Hyderabad,
Pune and Chennai, added a further 4,500 or
so between them. India now has 80,000
startups (see chart 1). They raised $10bn in
2019, up from $3.1bn in 2012 (see chart 2 on
next page). That puts India’s venture capi-
tal (vc) activity behind America ($114bn)
and China ($34bn) but ahead of largereconomies such as Germany or France.
PitchBook, a research firm, counts 18
unlisted “unicorns”, valued at more than
$1bn apiece, grazing in India. They are
worth a combined $72bn. Bright engineers
and managers now aspire to work for
them—or their vc backers—rather than
settle for safe careers at a multinational, a
bank or a state-run firm. Another 150-odd
“soonicorns” may reach the $1bn markshortly. They promise free cappuccinos,
excitement—and, for a lucky few, riches.
They may reconfigure parts of the national
economy. Mohandas Pai, a vc-wallah and
former finance chief of Infosys, a local tech
giant, predicts that within a decade India’s
startups will help triple its gdp.
Mr Pai is not alone in his bullishness.
India’s business press revels in tales of
startup wonder. Foreign vc firms have
piled in. They hope to ape the success of
Flipkart, an e-commerce platform in which
Walmart bought a majority stake for $16bn
in 2018. Yet despite startup India’s indis-
putable promise, pitfalls await the unwary.
The Indian vc scene has come a long
way. In 2005, when Rajan Anandan, a
partner at Sequoia Capital, a Silicon Valley
vc titan, returned to India after a spell in
America, all-important early-stage vcwas
close to non-existent. Foreign firms began
to fill the gap. Californian stalwarts, in-
cluding Accel, Matrix, Lightspeed, Besse-
mer and Norwest, have since set up mostly
autonomous Indian offices. So have Singa-
porean sovereign-wealth funds, Temasek
and gic; Chinese tech giants, Tencent and
Alibaba; and, inevitably given its startup
covetousness, SoftBank of Japan. They
have been joined by powerful local firms
such as Blume Capital. Giant Indian con-
glomerates such as Tata, Reliance and Ma-
hindra have launched vc arms. vc types say
they get more than 5,000 pitches a year.
Most of the money has gone into famil-
iar platforms: ride-hailing (Ola), food de-
livery (Swiggy, Zomato), online grocers
(bigbasket), car rental (Zoomcar), onlineTechnology in IndiaSilicon subcontinent
DELHI, MUMBAI AND SINGAPORE
After a decade of phenomenal growth, one of the world’s biggest startup scenes is
showing signs of troubleThe IT crowd^1Source:Bain& Company *ToDecember7thIndia, startups, ’0000204060802012 13 14 15 16 17 18 19*Business
50 Theanti-covidindustrialcomplex
51 Bartleby:Rethinkingsickleave
52 Multi-cloudcomputing
52 A caseagainststakeholderism
53 Schumpeter: The rise and rise of
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