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Unpeeling the Start-Up Ecosystem : Reflections of a summer intern

By: Abhilasha Kumar, 3/07/2013


The first assignment assigned to me as an intern at Flexing It ( involved compiling a monstrous list of the top venture capital & private equity firms in India, and their respective portfolio companies. As the list began to populate, and my manager insisted on deriving patterns out of it, I began to enjoy my work. An analysis is always interesting, but it needs a thorough compilation of data – my manager would say, and having heeded to her advice of drawing inferences from the list that I had half-heartedly compiled, I cannot but agree with her.

In the span of this assignment, I have already analyzed 15 venture capital firms and their portfolio companies, which amounted to a list of nearly 280 odd start-ups across the country. While we are no-where close to being done, I wanted to share some observations and patterns that one can already see from this data set.

While it is a well-known fact that technology and the internet, together, occupy a large share of the new Indian business economy, it was interesting to observe that approximately 30 percent of the start-ups analyzed are internet-based, while IT services including BPO, KPO and software services occupy nearly 20 percent of the market share. The healthcare and professional services sectors fall close behind at 12 and 7 percent respectively. The proliferation of internet start-ups has been driven by a combination of young consumers comfortable with technology, coupled with the ability to scale across geographies in a considerably short period of time and with lower investments.

If one delves deeper into the dynamics of the internet-services industry, our early analysis shows that more than a third of such start-ups are e-commerce models (e.g.Myntra, Freecultr). These are followed by Information sharing platforms such as  Justdial and Proptiger, and then online communities and markets including players like BharatMatrimony, Quikr, and Groffr. It was interesting to observe that only 1 of the 82 internet-based start-ups studied in this analysis, focused on online learning.  Other segments like online entertainment portals and support services were also underrepresented in this slice of analysis.


An interesting corollary that emerged out of this preliminary analysis of the start-up ecosystem, was that 30 percent of these ventures are Bangalore-based, rightly justifying its Silicon Valley reference. Collectively, metropolitans of Delhi, Mumbai, and Bangalore occupy nearly 70 percent of the location, while Chennai, Hyderabad, and Pune are other popular locations.


In this basic analysis of 15 venture capital firms, certain patterns seemed to stand out in terms of their investment strategy. While it appears that larger players generally prefer to diversify their portfolio across multiple sectors, most of which included IT services, Internet services, healthcare, retail/leisure and professional services, they continue to focus on at least two prime sectors for maximum returns. However, close observation of portfolio patterns suggests that the strong focus areas greatly differ from one venture firm to another. Smaller or medium-sized venture capital firms seem to employ a scaled-down version of the same strategy and prefer to target only one or at most two sectors. A pattern that seems to recur amongst many venture firms analyzed is one of maintaining a presence across nearly all segments of the internet services sector. Most VC firms prefer to invest in ventures across e-commerce, information sharing, and community websites.

While this analysis is in no way exhaustive or decidedly conclusive, it does shed light on some strong patterns that emerge out of the extremely complicated start-up ecosystem. Having analyzed only a sliver of the ecosystem, I am barely beginning to understand the many intricacies involved in terms of concept, scale, industry and target audience, which makes every one of its many players indispensable and important. I am quite curious to discover any new inferences that might surface as my analysis proceeds! Like Calvin, the six-year-old genius rightly put it, ‘It’s a magical world, Hobbes, ol’ buddy... let’s go exploring!’