Startups Are Rewriting India's Economic Growth Story: A Report

India's startup sector will transform the country into an economic powerhouse, with 250 unicorns expected by 2025. The sector is expected to attract $ 150-200 bn in investment from 2021-25. India is projected to become number 2 in terms of startup ecosystem by 2025.

Swati Dayal
New Update

The startups are rewriting India’s Economic Growth Story. The country is transforming into economic powerhouse. A lot can be attributed to the startup sector for this.


This sector has never failed to astonish the economic gurus by achieving new milestones when no one expects them to.

By the year 2025, India will have as many as 250 Unicorn out of total of 200,000 startups employing 3.25 million people. The startup sector will fetch USD 150-200 billion investment during 2021-25. 

According to a report 3One4 Capital by TV Mohandas Pai, it is projected that by the year 2025 India will beat China to become number 2 after US in terms of startup ecosystem.


So, one can say that Startups will be the key driving force behind making India a USD 3 trillion economy.

Mapping The Funds Raised by Startups


The growth story of startup can be mapped through the funds the sector has raised in the last 5-6 years amid the world facing the funding winters.

From the year 2014-2022, Startups have raised USD 136 billion. In the year 2022 alone startups raised USD 22 billion across 1,519 deals and 240+ Mergers & Acquisitions.

The Startup Demography of India


If we talk about the percentage of deals per city in India, Bengaluru leads the race with 36 per cent of the total deal in 22 followed by Delhi with 26 per cent, Mumbai 20 per cent, Chennai 4 per cent and Hyderabad 3 per cent. 

According to the report, 67 per cent of all active startups are concentrated in the big metro cities like Bengaluru, Mumbai and Delhi-NCR. 

Amongst these big cities, Bengaluru saw 48 per cent of the total deal value between 2021 and 2022.


Growth Of The Startup Ecosystem 

The growth of the startups can be attributed to the growth of entire startup ecosystem in the country. Between 2014-2022, there were as many as 520+ Incubators and Accelerators, 750+ Institutional Investors, 2,480+ Active Investors and 950+Acquisitions.


India’s 108+ Unicorns have created USD 350 billion in value. The report projects that by the year 2025, there will be 250+ Unicorns in India.⁠⁠⁠⁠⁠⁠⁠

Performance of VC Ecosystem In The Past Decade

Emerging of new companies as Unicorns or Soonicorns is also because of the conducive Venture Capital Ecosystem.

India's venture capital ecosystem has matured significantly over the past decade, driven by a combination of factors such as an increase in the number of startups, a growing number of venture capital funds, and favorable government policies.

According to a CRISIL Report, VCs have generated above average returns.

According to a report by NASSCOM, the Indian startup ecosystem has seen a steady growth of over 10% CAGR since 2014, with more than 12,000 startups currently operating in the country. This has led to a surge in demand for venture capital funding, with Indian startups raising a record US 10.14 billion in 2021, up 78% from the previous year.

One of the key factors driving this growth is the increasing availability of venture capital funds. Over the past decade, there has been a significant increase in the number of domestic and international venture capital funds setting up operations in India. According to data from Venture Intelligence, there are currently more than 600 active venture capital funds in India, up from just 150 in 2011.

Another important factor contributing to the growth of India's venture capital ecosystem is the government's proactive policies aimed at promoting entrepreneurship and startup growth. 

Additionally, the Indian startup ecosystem has seen an increasing number of successful exits, with several Indian startups going public or being acquired by global giants in recent years. These successful exits have not only provided attractive returns for investors but have also boosted the confidence of venture capitalists in the Indian startup ecosystem.

Value Created By Startups 

As many as 42 startups emerged as Unicorns over 2021, more than the figure for the last six years combined. In 2022, 22 new companies have emerged as Unicorns.

Over the past five years, Indian startups have created significant value, both for their investors and for the economy as a whole. From e-commerce to fintech to healthcare, Indian startups have disrupted traditional industries and transformed the way businesses operate in the country.

According to a report by Nasscom, the Indian startup ecosystem has grown at a CAGR of over 12% in the last five years, with over 12,000 startups operating in the country currently. These startups have raised over USD 70 billion in funding in the last five years, with 2021 alone seeing a record USD 10.14 billion in funding.

According to report from 3one4 Capital Estimates, Tracxn and Inc 42, by the year 2026 value creation by startups will grow at an unprecedented pace of 3X

In 2022-23, startups created value of USD 500 billion which will grow to USD 1.5 trillion in 2025-26.

In addition to creating value for their investors, Indian startups have also created significant economic value. According to a report by TiE Delhi-NCR and Zinnov, Indian startups have created over 4 million direct and indirect jobs in the last five years, with the total valuation of the Indian startup ecosystem reaching USD 507 billion in 2021.

Role of Startups In Achieving USD 3 Trillion Milestone

These reports and data clearly project that India is on track to become a USD 3 trillion economy in the near future, and startups are expected to play a significant role in achieving this goal. 

According to a report by Nasscom, the Indian startup ecosystem is expected to reach a valuation of USD 500 billion by 2025, up from USD 135 billion in 2021. This growth will be driven by a combination of factors, including a favorable regulatory environment, the increasing adoption of digital technologies, and the growing demand for innovative solutions.

With the increasing adoption of digital technologies, a favorable regulatory environment, and the growing demand for innovative solutions, Indian startups are well-positioned to continue to drive economic growth and create value for investors, employees, and society as a whole.