SPECIAL ARTICLE march 21, 2015 vol l no 12 EPW Economic & Political Weekly 56 New Generation Start-ups in India What Lessons Can We Learn from the Past? M H Bala Subrahmanya An increasing number of new generation start-ups in the technology/knowledge-intensive industries have created something of an “euphoria” in major cities of India. This paper discusses the salient features of the start-up ecosystem that has emerged in our country, its adequacy for start-up promotion, and the measures needed to strengthen this. As a prelude, the paper traces the origin and phases of start-up growth in India, and its employment contribution, relative to the organised sector. The paper concludes with an emphasis on the need for a steady increase in new generation start-ups as a means of productive employment generation, economic transformation and growth. M H Bala Subrahmanya (bala@mgmt.iisc.ernet.in) is Chairman, Department of Management Studies, Indian Institute of Science Bangalore. 1 Introduction O f late, technology entrepreneurship leading to high growth technology start-ups is assuming increasing importance the world over as a key to economic devel- opment. This is primarily attributed to the recent development of start-up ecosystem flowering all over the world. Historically, high growth start-ups have emerged primarily from a couple of start-up ecosystems, particularly Silicon Valley and Boston in the United States ( US ), but this trend appears to have reached its end. Along with a global explosion of entrepreneur- ship, there has been an explosion of new start-up ecosystems around the world (Start-up Genome 2012). Start-ups, generated due to technology-based entrepreneur- ship and known as new technology ventures ( NTV) can have significant positive effects on employment, and could rejuve- nate industries with disruptive technologies (Song et al 2008). Start-ups can contribute to structural change by introducing new knowledge-intensive products and services ( OECD 2013). Of late, India has been recognised, as one of the potential sources of hi-tech start-ups in the global economy (Gai and Joffe 2013). Within India, its “Silicon Valley,” Bengaluru is considered to have one of the best ecosystems for start-ups in the world (Start-up Genome 2012). It is also considered one of the nine “International Start-up Hubs” outside the US (Pullen 2013). About a decade back, India was considered one of the “dynamic adopters of technologies” and Bengaluru was considered one of the 46 “Global Hubs of Technological Innovation” in the world ( UNDP 2001). Today, India in general, and Bengaluru in particular is characterised by the presence of a growing population of “young technocrats” who are the potential sources of start-ups through NTVs. The growing potential for start-ups should augur well for the Indian economy because new venture creation has been statistically linked to both job creation and regional development (Acs and Armington 2006). However it is important to under- stand its flip side as well. Start-ups have been observed to have a limited survival rate (Song et al 2008). Creating a start-up involves a considerable degree of uncertainty regarding its future. More often, start-ups are created on a small scale with limited resources. They often face large and experienced com- petitors, powerful suppliers, sceptical customers and scarce resources (Subrahmanya 2010). Therefore, their ability to withstand sustained losses is usually very limited, and as dif- ferent researchers have observed, start-ups have a high failure rate relative to established firms (Hannan and Freeman 1984;