Maharashtra and the exciting growth of its startup ecosystem February 2019 KPMG.com/in © 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Table of contents 01 Executive summary 01 02 Introduction 03 03 India’s startup landscape 05 04 Maharashtra’s startup landscape: A closer look 15 05 State government push 31 06 Case studies 39 01 Maharashtra and the exciting growth of its startup ecosystem 02 Executive summary Tech startup funding INR331 billion INR665 billion Over 50 per cent 2018 (till 2014 of the funding is raised 3rd September) by e-commerce, fintech India largest ~7,200 Total funding raised by startups and transport tech sector, startup tech startups are INR2,784 between January 2014 – during January 2014 – base globally based in India billion September 2018 September 2018 period Ranked 1st Mumbai has Globally, Mumbai was ranked 7th in terms of number in terms of growth in VC deals secured in 2015 – 2017, 3rd largest of startup registration as compared to the 2010 – 2012 period startup base in India in 2018, in India Emerging startup hubs INR377 billion Soonicorns Enablers and drivers Nykaa • Supportive ecosystem Pune Nagpur Total funding raised by (investors, incubators etc.) Nashik startups in Mumbai and Dream 11 • Huge customer base Pune between January • Geographic advantage Aurangabad 2014 – September 2018 BookMyShow Maharashtra Key challenges Government initiatives Recommendations • High real estate prices • Maharashtra State Innovative Skills development Policy support and Startup Policy 2018 Job creation • Limited availability of tech talent sand training private participation • Transportation • Fintech Policy 2018 infrastructure issues • Maharashtra State Infrastructure Social and employment Innovation Society development incentives © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 03 Maharashtra and the exciting growth of its startup ecosystem Introduction India’s start-up ecosystem has startups. Home to a number of of Maharashtra has taken undergone a tectonic shift over experienced industrialists who various initiatives such as the the past decade. The number of can mentor and support startups launch of ‘Maharashtra State startups itself have grown seven with the right do’s and don’ts, and Innovative Startup Policy 2018’, fold from around 7,000 in 2008, if need be, fulfil their financial ‘Fintech Policy’ and established to around 50,000 by end-2018 . requirements as well, the financial ‘Maharashtra State Innovation These are not restricted to a few capital of the country is the place Society’, providing a facilitating sectors and geographies but are to be for budding entrepreneurs. environment for startups. It must spread across the board. Many of the emerging startups be noted that of the 14,565 odd such as Dream11 and Nykaa are startups approved under the Proliferation of the internet, higher based in Mumbai. country’s ‘Start-up India’ initiatives rates of literacy and a greater in 2018, highest number are from exposure to the outside world have However, the city has its own set Maharashtra . fuelled sector-based innovation of challenges for startups. For in IT, artificial intelligence, IoT, instance, real estate prices in In this backdrop, it will be finance, healthcare, biotechnology, Mumbai are steep compared to interesting to look at the evolving education, agriculture, and most of the other cities in India. It startup landscape in the country; logistics, to name a few. These is well known that few startups highlight the key legal and financial innovations are taking place all began operating out of Mumbai, considerations when setting over the country, because every but later shifted to other cities in up startups in India; assess region and locality presents a order to sustain and expand their the various startup initiatives unique set of problems, thereby business. That said, Mumbai still undertaken by the government; creating the need for customised remains a leading breeding ground present success and sob stories solutions. As a result, several for innovative minds, especially of select startups; and above regional startup hubs have B2B startups in the fintech and all, analyse the potential of mushroomed across India. Apart enterprise tech space. Maharashtra to become the #1 from tier I cities including Mumbai, Meanwhile, the progressive startup state. Bengaluru and Delhi-NCR, India is policy and regulatory environment also observing significant growth This thought leadership paper of Maharashtra has led to the in the number of startups in tier II looks to answer a few of these emergence of many other cities and III cities such as Jaipur, Kochi, questions by providing a deep- in Maharashtra like Aurangabad, Ahmedabad and Pune. dive into the foreseeable future of Nagpur, Sholapur, Nashik and startups in Maharashtra. That said, Mumbai is undeniably Pune to emerge as new regional the prime growth centre for startup hubs. The government © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 04 Arun M. Kumar Chairman and CEO KPMG in India Pradeep Udhas Office Managing Partner - West KPMG in India Atul Nishar President - TiE Mumbai Founder and Chairman - Hexaware Technologies © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 05 Maharashtra and the exciting growth of its startup ecosystem India’s startup landscape Overview India’s startup ecosystem can internet service01 which led to commendable. Driven by various best be dated back to initial and the emergence of the dotcom factors, the number of startups mid-1900s when few companies era. Hence, driven by the ‘world have increased from ~7,000 in started emerging, especially in wide web’ phenomenon, late- 2008 to 49,000 (till October 2018)02, the manufacturing space. Later 90s witnessed the inception implying a seven-fold increase in on, in mid-80s, the services sector of many dotcom startups such the Indian startup ecosystem. evolved when a handful of IT as BookMyShow, network With this, India has emerged as companies started emerging driven management companies such the third largest startup hub in the by the emergence of computer as Zoho and industry portals such world after the U.S. and the U.K.03 industry. After a decade, in 1995, as AgencyFAQs. Videsh Sanchar Nigam Limited However, the startup boom (VSNL) started its first commercial witnessed over the past decade is Startup base in India – Key facts (2018) Startup base Job creation 7,200-7,700 • 0.16 – 0.17 million people employed by startups Startup additions in India total tech- – 2.5 - 3.0x indirect Jobs startup base (as of 2018) 1300 1400 1000 1200 2015 2016 2017 2018 01. “20 years of Internet in India: On August 15, 1995 public Internet access was launched 03. “India’s Startup Ecosystem Now Boasts of 7,700 Tech Startups”, Entrepreneur, 26 in India”, News18, 15 August 2015 October 2018 02. “State of the Indian startup ecosystem”, INC 42, 16 November 2018 © 2019 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 06 Advanced technology startups Unicorns • +1,200 advanced technology startups (such • With 24 unicorns, India ranks third as analytics, artificial intelligence, Internet of in the world Things (IoT), etc.) – Expected to add 10+ companies • Advanced technology in the unicorns list, by 2020 startup pool has grown • In 2018, 11 new companies were at a CAGR of 40 per added in the list which is the cent, since 2013 highest in a calendar year Source: “Indian tech start-up ecosystem – Approaching escape velocity” NASSCOM, Edition 2018; “The State of the Indian Startup Ecosystem 2018”, Inc42, 2018 Edition If we look at the inception era of active internet users every month, Here it must be noted that of the Indian startups, a number of them the highest when compared to any total startup base, 7,200 – 7,70005 evolved when internet packs other country04. are purely tech startups, pointing got affordable and faster. So the towards a major digital revolution. Another key factor is the efforts growth in the country’s startup base This is primarily because India made by the government and could be attributed to increasing is home to a huge technology various state agencies which smartphone penetration which talent base which eventually is provided an enabling environment has led to a surge in the number complimenting the growth of to support these companies as they of consumers connected to the internet penetration in the country. have the potential to become major internet. As per Google, India is economic and social contributors. adding approximately 10 million Industry verticals attracting the highest number of startups Technology-enabled startups in even revolutionise the business use of emerging technologies India have been driving innovation landscape of various sectors such such as artificial intelligence (AI), to meet consumer needs, address as healthcare, education, financial machine learning, Internet of Things scalability issues, improve services, and logistics, amongst (IoT) etc.