It is estimated that there are more than 4200 start-ups in India, and on average 3 to 4 start-ups are coming up every day, making India the third largest global start-up ecosystem in the world. In this new India, a cultural shift can also be observed as individuals are willing to take risk and there is an added impetus by the government to build start-ups. Further with the rapid pace of development in technology and infrastructure, the overall startup ecosystem in India is improving.
In such an environment, both angel investors and venture capital funds are chasing deep technology startups. It is mainly due to such startups potential to scale up at a rapid pace, and then there is an opportunity to exit early and successfully. Many Indian startups are embracing artificial intelligence (AI), augmented reality and machine learning. It is also expected that the global AI market will grow to USD 5 billion market by 2020. In such an environment, the investors are also bullish, and as per our observation, the following are the three areas in which investors are willing to invest.
Healthcare: Let us analyze why healthcare is the area to be in – 70% of Indian population is without health insurance, more than 300 million are affected by tropical diseases and less than 1% of Indian healthcare providers are accredited. Thus, with the Indian healthcare in such state, there is a golden opportunity for Indian startups to disrupt the industry and make big bucks in the process. Globally too investors are optimistic about this space as they pumped in USD 5 billion of investment into digital healthcare industry in 2016.
Fintech: Most recently banking was all about real estate and banks were fighting hard to open their branches in prime locations. Multiple branches of a bank in a country used to depict strength, stability and safety. With ATMs, telephone banking and now the internet, banks have increased convenience to the customers and helped expand a bank’s reach. However, it seems we are at a digital tipping point, as with rapid technological progress, all the aspects of banking can be conducted online. There is a decrease in face-to-face interaction, and customers are demanding to transact at their own convenience, with all the advice and information to be provided at the click of a button. Further, with the present government’s focus on increasing cashless transaction, we have seen many payment gateways, especially Paytm, take the market by storm. Thus, it is no surprise that Fintech is the next big area that investors are interested in.
Edtech: The present Indian government has put an increased impetus on education and digitalisation. Further, there is an increase in mobile and internet penetration in India as more and more people are embracing the new technology. It is being seen that the young generation is using technology in all the aspects of their life, be it education or social life. Looking at all these factors, it makes sense to believe education sector as the next big sector. The startups working in the education space are using technology to change the way education will be imparted to the students. As per a 2016 study by Technopak, India’s education market is estimated at USD 100 billion and is poised to grow to USD 180 billion by 2020. A large part of this market would comprise of digital learning market, and thus it is only logical that investors are betting big on education technology.