India has secured the fourth spot worldwide in terms of scaleups, according to the first edition of Startup Genome’s Scaleup Report. The report indicates that the US, China, and the UK rank ahead of India. Nevertheless, India surpasses the UK in terms of total venture capital (VC) investment and cumulative technology value investment. The report highlights that India has recorded 429 scaleups, with a VC investment of $127 billion and a total value of tech investment of $446 billion.
The report delves into factors contributing to scaleup success by exploring the behavior, resources, and characteristics differentiating startups that reach $50 million and higher valuations within four to eight years. It is observed that startups with more than half of their customers from outside their continent and those with a high scaleup rate play a significant role in India’s ranking. Such startups have the ability to tailor their products and services to global markets, thus significantly expanding their potential customer base.
The report further reveals that startups based in large countries, with the exception of the US, tend to scale at a higher rate when they concentrate on their domestic market. In such countries, the size of the domestic market is substantial enough that it may be worthwhile to delay or forgo expansion into global markets. This phenomenon is particularly evident in India, where business-to-consumer (B2C) startups can achieve unicorn status and billion-dollar exits without venturing beyond the country. Additionally, the report indicates that startups with a local connectedness index score of 6 or higher achieve a scaleup of 5.1%, compared to 3.8% for those with a score of 2 to 4, representing a 34% boost. The local connectedness index measures the size, density, and quality of a startup’s local network. Furthermore, startups at an early stage with a higher local connectedness index witness revenue growth twice as fast as those with a lower index.
The report establishes a clear correlation between scaleup success and global connectedness. Startups that develop a high level of global connectedness have a 3.2 times higher chance of scaling than those with a lower level. Moreover, ecosystems that are more connected to top global ecosystems, such as Silicon Valley, NYC, and London, experience a higher rate of global expansion. A 66% correlation is found between these factors. The report also identifies several practices that can enhance a founder’s chances of scaling. These include offering stock options to all employees, having more than five global connections to top ecosystems, and engaging at least three advisers for the startup.
For more information, read the full article on Times of India.
