Today's developed countries are defined by their ability to innovate, and India, with its large number of young start-ups, offers a unique potential.

Indian startups are the torch bearers for innovation in the country. Currently the country has 60,441 registered start-ups, making it the world's third largest ecosystem. The interim budget too has emphasised the importance of India's youth continuing to innovate in order to propel the country forward.

The government has pushed for the adoption of digital technology through projects like the National Program on Artificial Intelligence (AI) and the creation of nine technological excellence centres.

India has one of the most rapidly growing startup ecosystems in the world. The Indian tech sector has experienced enormous growth in the creation of innovative startups, propelling it to the country's third-fastest growing hub.

Currently, the Indian startup ecosystem is home to a number of active startups that are leading the internet revolution in India. The internet has aided in the creation of thousands of companies that have addressed specific problems, reshaped entire industries, and created new segments.

However, over the last year, startup funding has fundamentally altered the startup ecoystem. 2021 proved to be a year of funding, with $35.4 billion being poured into the start-up ecosystem, compared to $13 billion in 2020. This year, there were 1,926 investment rounds, with 674 of them being Series A+ rounds. Furthermore, 3,143 new companies were created and regardless of the year of formation, almost 1,638 new enterprises were funded this year.

According to the data, Flipkart leads the charts with $3.6 billion in Series J fundraising, followed by $1.3 billion in Series J funding for Swiggy, and $1.1 billion in Series H funding for financial company Paytm. Eruditus, an edtech startup, became a unicorn after raising $650 million in Series A fundraising in August, while merchant platform Pine Labs raised $600 million in its Series E round. In 2021, the five firms were named the top five funded companies.

Interestingly, 2021 has also been named the year of unicorns, as 41 out of the total 77 unicorn companies were granted unicorn status this year, accounting for 53 percent of all unicorns.

Surprisingly, the leading market for fundings was Social Platforms such as ShareChat, which raised $1.4 billion in 2021, an increase of 1,733 percent over 2020. Following that, the increasing market of K-12 EdTech businesses like BYJU'S, Unacademy, and Vedantu, among others, raised $1.1 billion in 2021, representing a 54 percent increase over the previous year. Payments businesses such as Paytm, One97 Communications, and Pine Labs ranked third, with $1.1 billion invested in the market, up 189 percent from the previous year.

In more ways than one, the year 2021 will be remembered for the Indian startup ecosystem's record level of cash inflow, the birth of new unicorns, companies going public, and a new benchmark in terms of mergers and acquisitions (M&A).

According to the Research, the number of M&A transactions has increased to 119 since January 2021, up from 86 in the entire year of 2020. In 2020, this amounted to $1.3 billion in M&A value; by 2021, it had risen to $3.8 billion.

These are simply the trades that have been made public; the majority of them have not been made public, and their worth could be far greater.

The startup ecosystem has come a long way in the last five years, from a few investors and a few startups to over sixty thousand startups and over 2,000 Indian and international investors. International investors are increasingly flocking to India to invest in the country's expanding technology industry. The number of existing investors participating is increasing.

Sequoia Capital, Tiger Global Management, Accel, Blume Ventures, and Titan Capital were the top venture capitalist (VC) firms, while Temasek, WestBridge, CDC Group, Lightrock, and Dragoneer Investment Group were the top private equity (PE) firms. The number of unique investors increased by 23% to 1,808 in 2021, compared to 1,462 in 2020.

While the first ten years of the twenty-first century were spent bringing India's cities and metros online, the last ten years have been spent leveraging the internet to launch enterprises and startups, as well as to spread the digital torch to rural India. India now has the world's largest working population, which startups are anticipated to capitalise on in the next five years.

More than 500 million people utilise the internet in the country. As a result, we may anticipate widespread use of blockchain, AI, IoT, and data analytics across a variety of technology areas. Nonetheless, by 2025, India's startup population will have surpassed 100,000, resulting in the creation of more than 3.25 million jobs. Simultaneously, overall funding for Indian startups is expected to exceed $150 billion, with total value creation topping $500 billion. There will be no halting in the growth of Indian startups once the pandemic's medium and long-term effects have subsided.