Why B2B Startups Are On The Rise In India

Dilipkumar Khandelwal

2018 was a breakthrough year for business-to-business (B2B) startups in India. B2B ventures stepped out of the shadows from the more visible business-to-consumer (B2C) startups. Of all 7,400 startups in India, 43 percent were B2B companies last year, according to the consultancy firm Zinnov. In comparison, just four years earlier in 2014, just 26 percent of all 3,100 startups were B2B enterprises in India. We not only see a shift towards B2B business models, but B2B startups are also growing at a faster rate than B2C businesses, attracting the interest of venture capitalists and global corporations.

What has triggered the growth of B2B startups in India? Here’s why I believe the growth of B2B startups in India will continue to accelerate.

Most B2B startups compete globally from the launch

As the domestic B2B market for startups in India is still small (albeit growing) compared to that of countries like the U.S., most Indian B2B startups target global enterprises as customers, competing with other startups from around the world from day one. This is not an easy playing field for any company. However, B2B startups in India often have at least two aces up their sleeves: As India is a global innovation hub with R&D labs from many of the world’s largest corporations, startup founders or their team members have extensive knowledge of global enterprises. They also have access to one of the world’s largest IT talent pools, with a growing number of IT skillset programs geared towards the development of capabilities in IoT, analytics, cloud, machine learning, and artificial intelligence (AI).

The latest Global Competitiveness Report by the World Economic Forum (WEF) named India as a growing center for innovation and as one of the countries with the potential to catch up with economies that currently top the global competitiveness ranking. Bengaluru, Mumbai, and Pune appeared in the top 100 innovation centers of WEF’s cluster study. Of these three cities, Mumbai was the fastest-growing startup hub in India last year. Of the 50,000 startups founded in 2018, 14 percent registered in the capital of Maharashtra state, according to a KPMG report.

Indian B2B startups focus on fast-growing tech sectors and harness AI

Indian startups are adept at harnessing the potential of emerging technologies as innovation drivers for large enterprises. One of the fastest-growing B2B market segments is artificial intelligence (AI). According to a study by Accenture, AI could add $957 billion to the Indian economy, increasing the country’s income by 15 percent by 2035.

While we are still in the early stages of grasping the full potential of AI for the future of business and work, AI has outgrown its experimental stage for enterprise applications. According to a Capgemini study, India has taken the lead for AI implementation at scale globally. The study found that 58 percent of companies are already using AI at scale in India, beyond pilot and test projects, to innovate, and ultimately grow their business operations. The government’s Digital India initiative has created a favorable regulatory environment to foster the increased use of AI, per the report.

B2B startups benefit from new corporate partnership programs

India has about 210 incubators and accelerators, according to the NASSCOM-Zinnov Indian Start-up Ecosystem 2018 report. More than 35 corporate incubators and accelerators were launched in the past three years alone. Corporate R&D centers in India have started to shift their focus on intelligent technologies, including AI, machine learning, and the Internet of Things, and they have revamped their approach to innovation, opening their doors to external partners to develop new products and services.

An increasing number of innovations have come to market through a collaboration with corporations and tech startups. Many of these joint collaborations happen as part of the corporate incubator and accelerator programs or through a long-term technology partnership. Through these new corporate startup partnership models, Indian B2B tech startups have gained access to much-needed infrastructure support, a global network, and financing to achieve business growth.

Datoin is one B2B startup that is part of the new generation of Indian B2B startups. Since its launch in 2015, the Bangalore-based company has developed an enterprise automation platform that helps enterprises automate their processes by leveraging enterprise data, artificial intelligence, and component-based engineering. With Datoin’s platform, enterprises can build solutions that use intelligent automation to harness enterprise data.

Datoin was one of 16 companies selected for the 2017 SAP Startup Studio accelerator program, which prepares startups to develop and sell products for a global enterprise environment and market. The startup has grown leaps and bounds since then and continues to collaborate with SAP on innovation projects as part of the SAP Leonardo Center.

Thanks to new corporate partnership models, a sharp focus on intelligent technologies and growth sectors, and a global mindset, B2B startups are thriving in India. Their rise shows what we can achieve in the future globally when large corporations and startups work together to push the boundaries of innovation.

For more on how tech innovation is driving growth in the Indian economy, see Indian Startups Fuel Global Tech Renaissance.

Dilip Khandelwal

About Dilip Khandelwal

Dilip Khandelwal is the Managing Director of SAP Labs India. He is a member of the SAP Global Executive Team reporting to the Executive Board. Dilip was recognized by The Economic Times as a ’40 under 40’ leader. In 2019, he was named among the Top 100 Great People Managers by the Great Manager Institute, in collaboration with Forbes India. The International Business Awards honored Dilip with a Silver Stevie Award as Executive of the Year in the Computer Software Industry. He is a NASSCOM Executive Council Member and sits on the Governing Council of the International Institute of Information Technology, Hyderabad.