Startup Ecosystem in India, US and UK

Startup Ecosystem in India, US and UK

Who doesn’t remember the comfort of ice popsicles on a hot summer day? But this age-old product was one of the highest invested businesses with a 6 crore+ valuation in Shark Tank India, a platform that supports and invests in startups across the country. 

The number of startups is on the rise and they are now being widely recognised as important engines for growth and job generation. Multiple factors affect the success and failure of a business, both external and internal such as financial climate, big market disruptions, regulatory environment, size of markets, and big company transitions to name a few. 

India, UK and US are three dominant market players in promoting and nurturing the startup culture across the globe. This article aims to deep dive into these nations and understand what makes them stand apart. 

Promises To Be Kept, India
Boasting an annual growth of 7.5%, India today has the 3rd largest startup ecosystem in the world with about 86,000 startups in 2022; around 27,000 of these are technology-led startups. Commendably, 1300 new tech startups were born in 2022 alone, implying there are 2-3 tech startups born every day [8]. 

Creating this startup ecosystem wasn’t easy and was a slow, gradual process. The world economic crisis of 2008 was a blessing in disguise for a few Indians, especially IT professionals, who grew extremely fearful for their jobs and started looking for different means to keep themselves afloat [8]. Several startups were formed or forged during this year and can be marked as the beginning to start of something new. Another stark feature that aided this culture in India is the prevalence of middle-class families. Dissatisfaction with life and the zeal to prove oneself, somebody starts building upon a genius idea and works hard to put it into practice and establish a personal brand. This stands in contrast with most other nations. 

Cost of doing business, proximity of vendors-customers, higher internet penetration and with  elements of entrepreneurship and freelancing seeping into the veins of the Indian ecosystem, more and more professionals have since started to dissociate themselves from the big companies and do things on their own.

In 2015, Prime Minister Narendra Modi launched the “Standup India” initiative focussing on two key areas: simplification and handholding. Entrepreneurs enjoyed incentives including tax exemptions, funding, and incubators and accelerators more support. Ever since, there is a boom in the number of startups in India acting as vehicles for socioeconomic development and transformation. They have accelerated employment creation, especially with insufficient number of government jobs. They have also established deep networks in Tier 2 and Tier 3 cities, improving the quality of life and accessibility to masses. India has 112 million working-age people between the ages of 20 and 24, compared to China’s 94 million. With strong capabilities established, a lot of MNCs are now outsourcing their tasks to small businesses in India, aiding the growth of investment within the country. Additionally, thirst for better solutions, the R&D teams act as an innovation seeker, help keep the company updated and encourage a pragmatic approach. 

But what stands out for India, even more, is a growing pool of talent, with a large number of highly skilled engineers, developers, and entrepreneurs. Remarkable achievements are visible, such as increase in the number of women entrepreneurs to 14%, up from 10% in previous year. Bangalore has been listed within the world’s 20 leading startup cities in the 2019 Startup Genome Project ranking. It is also ranked as one of the world’s five fastest growing startup cities. Global giant Facebook recently partnered with Startup India to encourage new ideas and entrepreneurs [10]. 

But this doesn’t signify the country is void of any complications. Despite active government support, there is lack of access to early-stage funding, which makes it difficult for startups to get off the ground. There is also a shortage of experienced mentors and advisors, of a robust infrastructure, and a need for more support in areas such as legal and financial services. More subsidies and active support from varied stakeholders across domains will encourage more people to take risks and invest in creative ideas. 

Celebrating The “Let’s Go” Attitude, US and UK
US today has the biggest startup ecosystem in the world with more than 70,000 established startups, 7.1% of which are in FinTech industry. The government support and flexible regulations is largely responsible for nurturing and promoting this ecosystem alongside the entrepreneurial culture and mindset of the people. This makes it hard to replicate the success of this ecosystem anywhere else.
What makes US more unique and enticing for startups is ease of access to capital at all stages of business. It has a highly developed venture capital industry, with venture capitalists actively seeking promising investment opportunities. Major financial centres like Silicon Valley, New York City, and Boston attract significant investment and provide access to a wide range of funding options [1]

Moreover, home to prestigious universities and research institutions like Stanford, MIT, Harvard, and Caltech serve as breeding grounds for entrepreneurial talent as they foster innovation and necessary support. The support infrastructure developed in the economy too is commendable. This includes incubators, accelerators, co-working spaces, and startup communities that provide mentorship, networking opportunities, and access to industry expertise, helping startups grow and thrive.

Deep-rooted belief in the potential for individual success, a high tolerance for risk-taking and failure along with the many benefits of the US economy encourages aspiring entrepreneurs to pursue their ideas and create new ventures and thus attract talent from across the globe. 

It is however important to note that while the US startup ecosystem has numerous strengths, it also faces challenges. Intense competition particularly in major tech hubs like Silicon Valley, New York City, and Boston with people competing for limited number of positions makes it difficult to retain and recruit talent. High cost of living and operating expenses strain the financial resources of startups, particularly in the early stages [12]. One of the biggest challenge however is the US’s immigration policies and visa issues [11]. Obtaining work visas, such as H-1B visas for skilled workers, can be a complex and lengthy process, potentially affecting the ability to attract and retain international talent.


Another dominant player in booming startup culture is the UK. Popularly known as the FinTech epicenter, London has emerged as the leading hub of financial technology startups hosting 25 of Europe’s 50 most successful FinTech companies. The technology sector in the UK is growing 2.6 times faster than the country’s economy. Companies receive billions of pounds of venture capital investment each year [4] [5].

A relatively liberal and diverse population, a dynamic job market, proximity to Europe, a central location within the world’s time zones, and historic connections to centers of trade and innovation makes UK one of the major attractions for budding entrepreneurs. 

The UK is also one of the countries where it is easiest to do business because working environments are far from bureaucracy [3]. In addition, the convenience of company formation processes, the innovative market environment full of opportunities, and investors from all over the world make the UK a startup paradise. The government actively supports the startup ecosystem through various initiatives. For example, the British Business Bank provides funding and support for small businesses, and programs like Tech Nation and Innovate UK offer mentoring, networking, and funding opportunities for startups. It has also implemented favorable regulations to support startups. The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) provide tax incentives for investors, encouraging investment in early-stage companies [5]. Additionally, the UK’s declining corporate taxes and lower pay expectations are a clear benefit for the new UK Startup ecosystem. 

In terms of soft support, the Department for Business, Energy & Industrial Strategy maintains a database of schemes offering expertise and advice, while the Business is Great website provides information on subjects ranging from how to protect your intellectual property to tax advice. 

The UK has a well-developed financial sector and London, in particular, is a prominent financial hub, providing startups with access to capital and investment opportunities. Organizations like TechHub, Wayra, and Founders Factory provide mentoring, networking, and support services to help startups grow and succeed [5].

Thanks to renowned universities, research institutions, and cultural diversity along with the many other benefits, the UK attracts a diverse pool of talent from around the world. 

Access to the European market, prior to Brexit, provided startups with opportunities for cross-border trade and expansion. Brexit, along with complicated regulatory environment for cross border business makes scaling and expanding internationally a hurdle for startups. In general, complying with regulatory requirements can be complex and time-consuming for startups in the UK. Navigating tax regulations, licensing requirements, data protection laws (such as GDPR), and industry-specific regulations can pose challenges, especially for startups with limited resources and expertise.

Another consideration is the exorbitant prices and cost of living.  Startups face difficulty in keeping their finances afloat and make it challenging to attract and retain talent.
Parallels And Intersections, Striking Comparison Between The Three Startup Ecosystem Giants
India’s startup ecosystem stands in contrast with that in US and UK. Standing tall at 1st, US is without a doubt the dominant global ecosystem. This is not only in its scale and authority but also by the margin between the USA and its close competitors- India and United Kingdom. In comparison, the UK has a fifth of the total score compared to the United States. Currently, US has 1200+ unicorn startups in contrast to India with ~110 and UK with ~45 [4].

While the US can still be called the start-up capital but in comparison to the US, India has approximately twice the number of new start-ups. India has a mass domestic market, lending it a natural advantage over both US and UK. It has its own set of unique market needs and challenges, which can drive innovation and the development of tailored solutions. Startups that can address these specific requirements have the potential for significant market success. This along with low cost of living makes India a top attraction for budding entrepreneurs.

Additionally, India's middle class is expanding rapidly, leading to increased purchasing power and demand for a wide range of products and services. Businesses find it easier to cater to these demands rather than catering to the high-end, specific demands of developed nations like the US and the UK. There is great policy uncertainty in countries like the US and the UK as well, though remarkably less than in India. India’s trade policy, for example, has had a negative impact on startups. This is true in the US, too, but to a much lower degree. According to Heritage Institute, trade freedom in India has grown from 14 per cent to 71 per cent from 1996 to 2016, while in the US, this has grown from 78.4 per cent to 87 per cent from 1995 to 2016 [2]. 

The government regulations have not been very helpful either for the entrepreneurial ecosystem in India. As per the report of World Bank’s Ease of Doing Business Index [6], India is ranked 62 out of 190 countries. On the other hand, the US has a better performance with a rank 6 and UK with 8 signifying they require less procedures to start a business and are more promoting of startup culture. It is evident that there is not much difference between the marginal corporate tax of India (25-30%) with US (21%) and UK (25%) but one of the biggest concerns for the start-up ecosystem has been Angel tax which is currently 30% in India [4]. 

Despite this, there is growing focus on Indian economy by developers and organisations for introducing new services and pilot projects. There have been significant advancements in emerging technologies such as artificial intelligence, blockchain, Internet of Things (IoT), and fintech, only to grow exponentially each day. The subcontinent is proving to be more promising for investors, capitalists, entrepreneurs, and the financial institutions backing these startups. 

The rapidly improving social and economic conditions in India will now encourage entrepreneurs in India to start their own businesses and use ideas from other entrepreneurial ecosystems to develop their business in India. The present day India is nothing like its older self and is the leading producer in terms of IT industry, healthcare etc. It is one of the fastest growing markets of the world (comparable to US and UK).