India’s venture capital boom will push startup founders to the front lines of the new economy

A booming start-up ecosystem in India will drive up the proportion of start-ups to 500 million by 2025, said a report from the McKinsey Global Institute, which released a new study on Thursday.

In its report, McKinsey noted that India has more than doubled its share of venture capital in the last five years, with a growing number of start up companies taking on debt to raise capital.

The McKinsey report found that there are now about 4.5 million venture firms in India, compared with 3.6 million in 2016.

The country has seen an acceleration in the growth of tech start-offs, with growth of more than 15% in the tech start up sector from 2015 to 2017, McKinseys said. 

India’s start-off companies accounted for about a quarter of all venture capital raised in India in 2020, the McKinseys report said.

The start-out sector accounted for more than 50% of the total equity raised in the country in 2020.

India’s start up market is also growing faster than the rest of the developed world.

In the US, for example, it is growing faster, while China and Brazil are seeing slower growth, the report said, citing data from PricewaterhouseCoopers.

India’s innovation ecosystem is also becoming more connected, with the number of companies incubating in India jumping from 730 in 2017 to 1,300 last year, according to McKinsey.

This growth has made the country the country with the highest number of startups incubated, it said.

India, the fastest growing country in the world, is also home to the world’s largest number of tech companies, which are worth $16.6 trillion, the company said.