Growth of Startups In India: Some Startup Statistics in India For 2022

The Indian Fintech industry has and is still growing at a rapid pace despite the COVID-19 pandemic severely affecting the global ecosystem. Given the industry’s growth track, today, the sector has produced nearly 34 unicorns that are collectively disrupting the entire financial sector.  

This blog is a TL/DR of a Masterclass by Manmeet Singh, Growth Director, Cashfree Payments, at Your Story’s Techsparks Summit. He walks us through his thoughts around startup statistics in India and how they correlate to the growth of startups 

Here’s a synopsis for your reference.

India’s Transition Towards Digitization: What Do Some Startup Statistics in India Show?

The Indian government launched one of its flagship programs “Digital India” in 2015 to revolutionize the country’s digital infrastructure. It aimed to improve the quality and speed of services offered to its citizens and empower them with better resources.

In the last 5 years, India has witnessed the highest percentage of digital adoption with the pandemic serving as a major booster towards the push. As of date, India has over 624 million active internet users and it’s the second-largest consumer of the internet in the world. 

“India has witnessed high-growth digital adoption in the last 5 years. COVID-19 has catapulted the Indian economy into a digital-first approach.”

Manmeet Singh, Growth Director, Cashfree Payments

The Indian startups too have hugely benefited amidst the entire digitization scenario. Interestingly, India records the highest Fintech adoption rate of 87% as opposed to the global average of 64%.

Here’s a quick overview of India’s digital population:

  • 79% of the Indian population has mobile connections with 624 million internet users and 448 million active social media users
  • In January 2021, India saw a 2.1% YoY growth in mobile connections 
  • 47 million new internet users were added in January 2021 as compared to January 2020

India’s Digital Payment Market 

With India registering new highs in internet adoption, the digital payment space is benefitting from the shift. According to the Reserve Bank of India, digital payment products and services have successfully penetrated multiple sectors. They’ve also registered a growth of 30.19% during FY 20-21. 

Companies are rapidly revamping their traditional financial models and replacing them with digital infrastructures. Digital payment adoption is among the top digital disruptions in the country. 

Here are a few facts about how the Indian payment industry is changing the way people and businesses transact today. 

  • 589.6 million people are using digitally enabled payment methods
  • More than 30% growth in digital payments usage during FY 20-21
  • India recorded the highest digital payment transactions with 25.5 billion real-time payment transactions
  • NPCI recorded 3.65 billion transactions worth ₹6,54,351Cr in September 2021. That’s a growth rate of 2.3% (MoM)
  • The average value of annual transaction per user is USD 126
Cashfree payments - powerful and scalable payments platform for startups

While the western economy went card-first and then introduced other modes of payment, India skipped the card movement. It introduced UPI to ensure faster payments and simpler transactions. 

India’s Online Payments: What Are Startup Statistics in India Depicting?

In India, people aged between 16 and 64 are the highest users of internet-based payment systems. Here are some statistics to back our claim.

Digital platforms% of internet users
Mobile payment services (Samsung Pay, Apple, etc.)36.9%
Paid digital content (TV streaming, Music downloads, Epublishing, etc.)78.7%
Online ride-hailing service (Ola, Uber, Rapido, etc.)25.5%
Online food delivery service (Doordash, Deliverfood, etc.)58.1%

Adding to this India has seen over 38% annual growth in the total value of the consumer goods eCommerce market. These usage trends have further propelled the digital payments space in the country.  

Key Startup Statistics in India

In the last half a decade, startups have significantly fuelled the Indian economy. They’re not just new businesses entering an industry, rather transformation-driven organizations with an aim to change legacy concepts. 

Here are some interesting startup statistics around how the top 100 Indian startups performed in FY20.

  • The startups collectively recorded total revenue of more than USD 7.3 billion. 
  • 24 out of 100 startups are EBITDA positive. They incurred a total loss of USD 3 billion
  • The median revenue of unicorns stood at USD 31.2 million
  • The average surge of 181% between FY19 and FY20
  • Unicorns clocked an annual revenue of USD 83 million 
  • About 16 startups are gearing up for IPOs.

The insane growth of startups continued in 2021. The total capital inflow in Indian startups crossed USD 10 billion across 614 funding deals in the first half of the year. The second half of 2021 saw a 72% increase in total funding as compared to H2 of 2020. 

  • India now has 66 unicorns. More than 38 of them are eCommerce, SaaS, and Fintech startups. 
  • Fintech garnered top position with USD 1.98 billion across 98 deals, followed by the EdTech, and FoodTech startups in the subsequent positions. 
Cashfree payments - gateway and payouts for eCommerce

So, how long does it take for a startup to attain the status of a unicorn?

There are two timelines to view this scenario – before FY 2010 and after FY 2010. 

Before 2010, a startup could generally attain the status of a unicorn within 10 years of its establishment. Whereas, startups funded after 2010 completely changed the dynamics. Owing to the availability of ample funds, supporting technology, and better manpower, they’re able to reach unicorn status in less than 5 years. In 2021 alone, 7 startups reached unicorn status in less than 4 years of their existence. 

“Nearly 54% of companies have become unicorns in 2021”

Manmeet Singh, Growth Director, Cashfree Payments

Digital payments, one of the major reasons behind the massive growth of Indian startups

Digital payment is one of the reasons behind the disruption of the Indian startup ecosystem. It has helped many startups become unicorns in the shortest possible time by sorting their payment infrastructures through its cutting technology, banking systems, and other services. 

However, the increased use of the internet has also increased fraudulent activities. To prevent fraud and safeguard startups and end-users, fintech players like Cashfree Payments provide technical assistance. They’ve developed full-stack payment solutions for B2B companies to help them conduct activities safely and efficiently.

Khatabook is a perfect example to quote here. Cashfree Payments has enabled automated payment reconciliation through APIs for same-day money settlements and helped them reduce process frictions. 

Fintechs are handholding startups with technology solutions and allowing them to concentrate more on their core products and services. Essentially fintech works with multiple banks and technologies to facilitate successful payments if one mode goes wrong. 

“Startups in India are growing at an exponential rate. Fintechs are helping them become unicorns in no time”

Manmeet Singh, Growth Director, Cashfree Payments

Here are some challenges addressed by PSP’s like Cashfree Payments.

1. Mobile-first Approach – Traditional online transactions are quite challenging as it’s hard to provide multiple payment options on small screens of smartphones. Also, the consistency of internet speed is crucial to avoid transaction failures. 

2. International Acceptance – PSPs facilitate the acceptance of international payments through multiple modes. 

3. Refund experience – Faster settlements of refund money to customer’s account. Cashfree Payments has provided an instant refund solution that helps e-Commerce players to provide a premium experience by settling money on the same day without any hassle. Cashgram is the instant refund solution for COD orders developed by Cashfree Payments. 

4. Payment settlement cycle – After successful debit from the customer’s account, the fund has to reach the vendor account within two working days. Earlier the fund credit, the more stress-free the vendors can be.

5. Integration Support for Your Platforms – Offers payment gateway plugins for multiple-payment platforms along with a detailed guide for major computer languages such as PHP, Python, Ruby, C#, etc.

6. Swift Onboarding and Timely Support – Opening a merchant account with a payment gateway should not take more than 24 hours. Providing real-time support through live chat, email, etc can reduce downtime or operational errors. 

7. Pricing – Generally, an upfront cost of 2-3% is charged by payment gateways. Based on the requirement, prices can be negotiated through the sales teams and brokers.

Cashfree payment gateway CTA

As the startup statistics in India reveal, innovations from the payments industry has helped many ultra-growth businesses to scale at large.

Overall fintech companies have assisted the startup ecosystem in providing seamless cash transactions with high volume cash inflow and outflow. Also, it has assisted social eCommerce players which target customers located in Tier -2 and Tier-3 cities.

Leave a Reply