How to Start a Startup in India: Navigating the Hidden Layers for Success in 2024
Vedant Pandya
Business Analyst | Product Owner | Digital Transformation | SaaS | GTM Strategist | Brand Building
Our startups are changing the rules of the game. That's why startups are going to be the backbone of new India with over 1.25 lakh registered startups in the country.
Let’s take a trip back to 2010. A young college dropout, fresh off a failed startup, was standing in a small town in Orissa, looking at dingy budget hotels.
Frustrated with the poor standards but unwilling to give up, Ritesh Agarwal had a flash of insight—what if someone could standardize these scattered, fragmented accommodations?
That idea birthed OYO, which would go on to redefine hospitality in India and expand across the globe, becoming a billion-dollar unicorn.
But here’s the fun part—Agarwal didn’t just stumble upon success. He built it, one hidden layer at a time. Each hotel, each city was another brick in the foundation of a massive, unseen network.
In today’s fast-growing Indian startup ecosystem, entrepreneurs don’t just need the next big idea. They need to think like Agarwal—to find the hidden layers of growth, to build the unseen networks that thrive beneath the surface.
So, how do you start your own OYO-like journey in 2024? Let’s dive in.
India’s startup landscape has evolved rapidly, from the humble beginnings of tech entrepreneurs hacking solutions in makeshift offices to unicorns shaping the global market. This transformation has spanned decades, creating an entrepreneurial buzz across the country, with each era marked by new milestones and opportunities.
A Timeline of India’s Startup Buzz
1991: Liberalization of the Indian Economy
India opens its economy, laying the groundwork for future entrepreneurial ventures.
Narayana Murthy famously quipped that giving an Indian a computer would solve the world’s problems.
1999-2000: The Dot-Com Wave
The founding of Rediff.com and Naukri.com marks the first wave of dot-com startups. The Indian IT sector begins to flourish with giants like Infosys and Wipro dominating global outsourcing.
2007: Flipkart is Founded
Sachin and Binny Bansal launch Flipkart, starting with books but rapidly evolving into a massive e-commerce platform.
In 2018, Walmart acquires a 77% stake for $16 billion, showcasing the global interest in India's e-commerce boom.
2008: The Birth of Zomato
Deepinder Goyal and Pankaj Chaddah start Zomato as a restaurant listing service.
Fun fact: One of its first reviews humorously noted, "Not my grandmother’s kitchen," prompting Zomato to add recommendations based on 'nani's' favorite dishes. (Creative since the beginning)
2010: Ola Cabs Launches
Bhavish Aggarwal and Ankit Bhati introduce ride-hailing in India.
Meanwhile, Ritesh Agarwal, famously wandered into a hotel without a booking, taking notes and blurring the line between guest and secret shopper.
2013: Snapdeal Raises $50 Million
Snapdeal's funding signals growing VC interest in the Indian startup scene.
2015-2020: The Unicorn Run
Companies like Paytm, Byju’s, and OYO become unicorns, redefining scalability.
The Indian government launches UPI in 2016, revolutionizing digital payments, which spurs the fintech sector.
2020: Pandemic Fuels Digital Transformation
COVID-19 accelerates the growth of digital-first startups, with Byju's and Unacademy thriving as education moves online.
2021: India Surpasses 100 Unicorns
India becomes the third-largest startup ecosystem globally, with companies like Cred and Nykaa gaining prominence.
2022: IPO Frenzy
Major startups like Paytm and Zomato go public, raising billions, marking a maturation of the ecosystem.
2023: Rise of AI and Web3
Startups in AI, Web3, and climate tech gain traction, spurred by investor interest and government support.
The Hidden Layers: Thriving in a Complex Ecosystem
Today, starting a company in India is both thrilling and daunting. The ecosystem is mature, the capital is flowing, and the talent is abundant. But as a first-time entrepreneur, how do you navigate this?
“Startup success today isn’t just about solving an obvious problem,” writes entrepreneur and investor Paul Graham. “It’s about seeing the hidden layers beneath it.”
In the Indian context, thriving as a new startup means going beyond traditional approaches. The startup ecosystem, particularly in 2024, is not just about incremental solutions; it’s about understanding the unseen layers of growth and opportunity. Today’s market leaders are building at these hidden layers, tapping into unaddressed needs, and innovating in ways that create entirely new value chains.
Copy-Pasting Western Ideas Doesn’t Work in India Anymore
India’s startup landscape is distinct, and blindly copying Western startup ideas simply doesn’t cut it anymore. Why?
To find the next big idea, focus on problem spaces that have not been visibly addressed but exist under the surface of obvious consumer needs. For example:
- Localized solutions: Look beyond urban India. Tier 2 and Tier 3 cities hold untapped potential. Agri-tech, vernacular internet, and healthcare delivery services can thrive in these regions.
- Infrastructure gaps: Logistics and supply chain optimization for rural areas still lack effective, scalable solutions. The rise of e-commerce has surfaced issues in last-mile delivery that need creative fixes.
- Trust and financial inclusion: Despite the fintech boom, a large portion of India remains underbanked. The next wave of financial services must build solutions that focus on financial literacy, credit assessment, and digital trust for lower-income groups.
Framework for Building in 2024: The Hidden Value Model
I propose a framework for thinking about your startup called the Hidden Value Model. Here’s how it works:
Identify Visible Opportunities:
Look at areas where growth is booming (fintech, edtech, health tech, D2C brands, etc.), but don’t stop there. These visible opportunities are saturated.
Find the Hidden Layers:
Beneath each visible trend, there are unresolved pain points that lie hidden. For example, with fintech, the obvious winners are digital wallets and payment platforms. But the hidden opportunity could be in lending models for underserved communities or creating trust in digital banking for older populations.
Innovate Around Constraints:
Think about constraints (infrastructure, language, affordability) not as barriers but as launchpads for innovation. Companies that succeed in India often thrive because they find creative ways to adapt to local constraints.
Build the Hidden Ecosystem:
Many startups focus on building consumer-facing products, but in 2024, building the ecosystem is key. Consider how your product can enable others to succeed—whether it's through open APIs, creating platforms, or building complementary infrastructure.
The principles guiding startups today are vastly different from five years ago. Here's how the playbook has changed:
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1. Sustainable Growth: Investors are looking for long-term sustainability. The days of burning cash for user acquisition are over. The focus is now on healthy unit economics and demonstrating how you can scale profitably.
2. Localized Product-Market Fit: One size does not fit all. Tailor your product for India’s diverse markets, adapting to regional preferences and affordability constraints.
3. Tech-First Execution: AI, ML, and blockchain are no longer buzzwords. If your product isn’t tech-centric, you’re not just missing an opportunity—you’re already behind.
4. Community-Driven Models: Building trust and loyalty through community engagement is essential. Social commerce and peer-to-peer networks are thriving because they empower consumers to co-create and support.
But how to Gauge the Market ???
1. Start with Primary Research: Understand the current market landscape with on-ground research. Visit cities, interact with target users, and conduct surveys.
2. Study the Competition: Understand what the competition is missing. Often, thriving startups leave certain pain points unresolved—this could be your opportunity.
3. Focus on Unit Economics: From Day 1, keep an eye on your costs, revenue, and cash flow. Sustainable businesses have clear revenue streams and low customer acquisition costs (CAC).
4. Leverage Local Expertise: Seek mentorship from Indian entrepreneurs who understand the regional market intricacies.
Evolution of the Indian Consumer Base
The Indian startup ecosystem has grown rapidly, fueled by a diverse and evolving consumer base. Let's categorize the modern Indian market based on each with their unique behaviors, preferences, and purchasing power to get to know your consumer.
Tier 1, 2, and 3 City Consumers
- Tier 1: These cities (Mumbai, Delhi, Bengaluru, etc.) are home to tech-savvy, high-income consumers who adopt new technologies quickly. This segment seeks premium services and experiences. Startups like Swiggy, Zomato, and UrbanClap thrive here by catering to lifestyle needs and convenience.
- Tier 2 and 3: Smaller cities have seen significant economic growth, with rising internet penetration. These consumers are value-conscious and are looking for affordable solutions. Startups like Meesho and Udaan have tapped into this market by focusing on affordability and small-scale entrepreneurs.
Digital Natives vs. Digital Adopters
- Digital Natives: Millennials and Gen Z form the largest portion of digital natives. These consumers, mostly aged between 18-35, have grown up with the internet. They are socially and environmentally conscious, demanding personalization, seamless experiences, and transparent brands.
- Digital Adopters: A more recent category of consumers who have come online after the smartphone boom and affordable data rates post-Jio revolution (2016). This segment includes older generations or those from rural regions, whose entry into the digital economy has created new opportunities for startups, especially in fintech, telemedicine, and e-commerce.
Affluent vs. Aspirational
- Affluent Consumers: These are high-income individuals from upper socio-economic strata, often residing in metros and Tier 1 cities. They prefer premium services, international brands, and quality over cost. Startups like Cred, which cater to premium users, have tapped into this segment effectively.
- Aspirational Consumers: These are individuals from lower-income groups who are constantly seeking opportunities to climb the socio-economic ladder. They are early adopters of affordable, innovative solutions that provide them access to services previously reserved for affluent consumers. Companies like Paytm and PhonePe have built a large user base by offering digital financial services to aspirational consumers.
What Works Today: Insights from India's Unicorns
Analyzing the unicorns of today, there’s one clear pattern: hidden value and ecosystem building.
Startups like Cred (trust in financial systems), Razorpay (fintech infrastructure), and Meesho (social commerce) have one thing in common: they built the foundational layers enabling other businesses or consumers to thrive.
Scaling Beyond India: Global Expansion Opportunities
As Indian startups mature, the question naturally arises: Is there an opportunity for Indian startups to scale in international markets? The answer is a resounding yes.
The combination of a highly-skilled workforce, lower operational costs, and a deep understanding of solving problems in emerging markets makes Indian startups well-positioned to go global.
Let's take a look at how startups can scale abroad and what lessons can be learned from those who have successfully done it:
Freshworks
Zoho
OYO
What are the various Opportunities for Indian Startups to Scale Globally ?
SaaS Products
India has emerged as a global SaaS hub, with startups like Zoho, Freshworks, and Chargebee gaining traction in the US and Europe. Indian SaaS startups benefit from offering competitive pricing, high-quality development, and serving SMBs globally.
The B2B SaaS space is ripe for Indian startups to tap into, particularly for cloud, CRM, and customer support software.
Fintech Solutions for Emerging Markets
Indian fintech startups, especially those focused on digital payments and lending (like Razorpay, Pine Labs, Paytm), have the potential to scale to other developing countries where digital payments infrastructure is still nascent.
Countries in Africa, Southeast Asia, and Latin America share similar market characteristics to India, making these regions ripe for fintech solutions developed in India.
EdTech Solutions (I am still a bit skeptical about this though!)
The demand for online education tools skyrocketed during the pandemic, and Indian EdTech giants like Byju’s, Unacademy, and Vedantu have successfully expanded into global markets like the US and Middle East.
Indian EdTech startups can leverage their strong pedagogical models and affordable pricing to enter more developed markets where education costs are high, as well as underserved regions like Africa.
Healthcare & Telemedicine
Startups in telemedicine and healthcare tech, such as Practo and 1mg, have vast opportunities to scale in regions where healthcare access is limited. With the growing demand for affordable, remote healthcare solutions, Indian startups can provide innovative solutions to markets in Africa, Southeast Asia, and Latin America.
AgriTech Solutions for Emerging Markets (Can be our forte!)
India has been pioneering AgriTech innovations like DeHaat and Ninjacart, which offer platforms for farmers to access markets, credit, and logistics. These solutions can be adapted to other developing economies in Africa and Southeast Asia, where agricultural challenges are similar to those in India.
Simple Strategies for Indian Startups to Scale Globally
]Build and iterate on products in India, where operational costs are lower, and then market them to developed regions where consumers are willing to pay higher premiums.
Global success requires more than just exporting the same product. OYO’s expansion into China and the US demonstrated the importance of localizing operations—whether by adapting the business model or aligning product offerings to suit regional preferences and regulations.
Indian startups can identify niche markets or underserved sectors in developed countries, where competition may be less intense. Offering highly specialized services, such as niche SaaS products or targeted fintech solutions, can allow Indian startups to gain a foothold abroad.
Partnering with local businesses or regional players can ease the process of entering new markets. These collaborations can help navigate regulatory challenges, cultural differences, and local consumer preferences.
Building in India Is About Layering Solutions
As a founder in India, you’re not just solving problems—you’re building solutions on top of unseen needs. The key to success in 2024 is understanding the hidden layers, building an ecosystem around your idea, and tailoring it to India’s unique market dynamics. Find your niche, dig deep, and remember: the next big opportunity lies beneath the surface.