What Ecosystem Factors Impact the Growth of High-Tech Start-ups in India?

Abstract

This paper empirically establishes the role played by the ecosystem related parameters in the emergence and growth of high technology start-up clusters in India. It is mainly based on secondary data from six major start-up hubs in India during the period 2005-2013. Our results throw up several interesting findings. First of all, we find that traditional infrastructure related factors or robust macroeconomic situation in general are not the most important drivers. What really seem to matter are the specific start-up ecosystem related factors -such as the Internet penetration, volume of deal flow, availability of VC funding and a pre-existing critical mass of relevant high technology businesses and skill-sets. Above all, our study points out that high economic growth alone will not automatically lead to spillovers in the form of a vibrant start-up ecosystem. Rather it has to be a product of conscious and concerted policy efforts at all levels that directly address the main challenges faced by the early-stage start-ups.

Resources or Capabilities: A Study of Startup Emergence within Applied Research Universities in India

“…of them in North India, 18% in West India and just 6% in East India. This is fairly consistent with the rest of the elements of the entrepreneurial ecosystem, such as venture capital firms, high technology start-ups and multinational corporations (Joshi and Satyanarayana, 2014). In particular, the presence of 'critical mass', is the principal factor responsible for the concentration of incubators in South and West India (Joshi, 2015).…”

“…The existence of companies that operate in the same or related sectors promotes the natural exchange of ideas through formal and informal networks among organizations. The presence of 'critical mass' of firms belonging to the same industry are conducive to the academic start-up culture (Joshi and Satyanarayana, 2014). These firms can be conduits of technology transfer by acting as both mentors as well as potential customers.…”

“…In fact, Friedman and Silberman (2003) found that universities in locations that are characterized by a relatively high concentration of technology firms generate more licenses and license income (Fini et al, 2011). Another important element of this local ecosystem are the venture capitalists and typically venture capitalists focused on early-stage investments tend to be concentrated in same geographic locations as incubators (Joshi, 2015;Joshi and Satyanarayana, 2014).…”

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“…Around 18,000+ startups have been recognized by DPIIT till May 2019. The key success factors of the Indian startup ecosystem are the cost of doing business, proximity to customers and suppliers, and size of the domestic market ( Joshi and Satyanarayana, 2014). Sindhani et al (2019) studied the founders of the top 25 startups of India.…”

Managing the risks from high-tech Investments in India: differential strategies of foreign and domestic venture capital firms

“…Presence of a vibrant ecosystem in terms of the presence of incubators, accelerators, business angels and incubated companies (Joshi and Satyanarayana, 2014) is an important factor considered by the VCs in determining their geographical location. Co-location with other elements of the ecosystem possibly facilitates access to critical resources and also reduces the transactions costs of accessing the same.…”