However, it is ahead of the UK in terms of the total venture capital investments put into these scale-ups, and in terms of the cumulative investments in technology value of the scale-ups. According to the report, India has registered 429 scale-ups, with a venture capital investment of $127 billion and a total value of technology investments of $446 billion.
The report is a study of success factors for scale-ups, building on the question of what behaviors, resources and characteristics of startups distinguish startups that scaled to $50 million and higher valuations within four to eight years from startups that did not.
Startup Genome, an innovation policy consultancy and research firm, surveyed startups in more than 80 cities in more than 40 countries and looked at more than 60 metrics.
According to the report, India has startups where 50% or more of their customers come from outside their continent and have the highest scale-up rate. This can be partly attributed to startups tailoring their products and services to truly global markets – not just outside their country, but also outside their continent – dramatically increasing their potential customer base.
Startups based in major countries (excluding the US) scale faster if they focus on their domestic market. In those countries, the size of the domestic market is so large that it may be worthwhile to postpone or forego global markets. This is certainly evident in India, where B2C startups can achieve unicorn status and spend billions of dollars without having to leave the country. Startups with a local connectedness index score of 6 or higher achieve a scale of 5.1% compared to 3.8% for companies with a score of 2 to 4 – an increase of 34%. The local connectedness index measures the size, density and quality of a startup’s local network. Early-stage startups with a higher local connectedness index see their revenue grow twice as fast as startups with a lower local connectedness index.
The success rate of scaling clearly increases with greater global connectedness, and startups that develop high levels of global connectedness are 3.2 times more likely to scale than startups with low levels. Ecosystems that are more connected to the major global ecosystems (such as Silicon Valley, NYC and London) see their startups go global at a much higher rate on average (66% correlations between these very different variables).
Founders looking to increase their chances of scaling should ensure they offer stock options to all employees, have more than five global connections to top ecosystems, and have at least three advisors for their startup.