India Just Became One of the Hottest Places to Grow a Startup and Invest

While China may be the world’s next big tech market, startup fever has caught on in India and now the whole world is investing in the Indian versions of Alibaba and Uber.

India’s growth, not to mention its massive population, makes it a new land of opportunity for both entrepreneurs and investors. Matt Turlip, a senior analyst for financial data firm PrivCo, says:

“If you look at India’s growth and demographic, you can see that the next hot tech market after China is India.”

According to CNNMoney, venture capital funding for Indian startups is up 261 percent since last year, totaling $3.86 billion so far. It’s a small number compared to the U.S. venture capital amount of around $30-40 billion for 2014, but it is sure to see an increase when the entrepreneurial craze takes off.

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India’s version of Alibaba, ecommerce platform Flipkart, took in $1 billion in funding last July while its rival SnapDeal landed $653 million in October, making their total funding for this year alone $1 billion.

Within the past few months, Japanese VC firm Softbank, whose early investments include Alibaba, has also dropped a total of $800 million on SnapDeal and Olacabs, India’s version of Uber, and bought up a 36.5 percent stake in ScoopWhoop, India’s version of Buzzfeed.

American VC firms Sequoia Capital and Accel Partners have also been investing hundreds of millions in India’s tech sector for years — Accel is an early investor in Flipkart. Even global corporations like Microsoft are getting in on the action. Microsoft CEO Satya Nadella announced plans this month for free internet access in India by creating three data centers throughout the country — Microsoft sees a $2 trillion opportunity in the Indian market.

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Vivek Wadhwa, an Indian-American academic and entrepreneur, explains:

“500 million people will be coming online over the next three to four years on inexpensive smartphones … This will create an Internet revolution that will make our dot-com boom seem lame.”

India has a population of 1.25 billion people, half of whom are under the age of 25. Within our lifetime, India will become the most populous country in the world.

The growing market size means that entrepreneurial ideas have a lot of potential to catch on (especially when you can look to already developed Western versions), but in a country where almost a third of the population lives below the poverty line, there are surely many opportunities for entrepreneurs to tailor successful startups that target and help the poor.

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