The burgeoning start-up scenario has undergone a paradigm shift globally. It has witnessed several shifts in the predominant trends throughout the last few years. Though the current changes prevalent in India are also evident among the nations with a comparatively larger start-up ecosystem, like the U.S., the start-up scenario in India varies on certain factors.
Here’s a comprehensive overview of how India and the U.S. differ in their present start-up ecosystems:
2016 has witnessed both Indian and U.S. start-ups tread cautiously in varying degrees
While 2015 had been a boon year for both markets, 2016 had witnessed a global slowdown in the investment activity and the number of deals sealed. According to a VCCEdge Report, the venture ecosystem in the U.S. touched $79.3 billion in 2015 and $69.1 billion in 2016. The report also highlights that private equity investments in India fell by 25 percent and the number of deals sealed reduced from 1,752 in 2015 to 1,309 in 2016. The scenario was no different in the U.S., with 10,468 deals struck in 2015 in contrast to 8,136 in 2016. The change in trend was the result of venture capitalists concentrating more on unit economics rather than banking on the number of customers and valuation of a start-up as a deciding factor for investing in a start-up.
An apparent global shift towards reliable methods of investing
India is a country of cultural oxymoron. Resistance towards adapting to new trends and developments makes India a challenging and highly competitive marketplace for businesses. This competition is more apparent for certain sectors, like e-commerce, as compared to some others. Therefore, investors are often wary of investing in these sectors. In the U.S. too, investors prefer investing in sectors that have borne results for them in the past and are a reliable option for generating ROI.
Incremental growth of start-ups in India is faster
A NASSCOM survey indicates that the estimated number of start-ups in India will increase from 4,200 in 2015 to a whopping 11,500 in 2020. Besides, infrastructure is also growing at an impressive 40 percent every year. Despite India being no competition to the U.S. in terms of the number of venture capitalists, angel investors and funding volume, the start-ups in the country are scaling faster than those in the U.S. The image here throws light on how India is scaling faster than the U.S.
Policy uncertainties plague both nations
Uncertainties regarding policy decisions often prove to be an impediment towards the establishment and growth of start-ups. Though policy uncertainties are prevalent in both countries, it is remarkably greater in India than in the U.S. While trade freedom in India has increased from 14 percent to 71 percent between 1996 and 2016, it has gone up from 78.4 percent to a steep 87 percent between 1995 and 2016.
India needs to formulate investment-friendly policies
While the Economic Freedom of the World Report 2016 by Frazer Institute places India at the 112th position, the U.S. has been ranked at 16. India also falls behind in the ease of starting a business. India ranks at 155 with 14 processes to complete in Mumbai to register a start-up, while the U.S. ranks at 51 with only six processes away from starting a business.
Concentrate on establishing your start-up and keeping abreast with smart start-up strategies instead of building infrastructure for your business. For instance, educating yourself on how to work in a vibrant co-working office space would be beneficial for any start-up.
About the Author
Annie Fernandes is a Senior Technical Writer. She has over five years of experience in the Information Technology & Services Industry. She is Skilled in Research, Media Management & Communication, Web Content Writing, and Customer Service.