Indian start-ups in fields such as IoT, edge computing, gaming, and enterprise applications are facing a significant funding crunch as the rollout of 5G technology in the country fails to generate enthusiasm among consumers. Despite claims of the “fastest rollout of 5G in the world”major telecom players like Reliance Jio and Bharti Airtel, start-ups reliant on 5G are seeing their funding decline from $639 million last year to $134.1 million, according to Tracxn.
This stands in stark contrast to the situation when 4G technology entered the market in 2016. The introduction of cheap and high-speed internet through Reliance Jio sparked a data boom and led to a surge in funding and rapid growth for consumer tech start-ups like Flipkart, Ola, and Paytm. However, the lack of demonstrable and differentiated use cases for 5G has hindered its adoption in the Indian market and dampened investor interest.
One of the main reasons for the slow demand for 5G is the patchy quality of the network itself. The unreliable network coverage doesn’t inspire confidence among private fundraisers. Moreover, the substantial investment required to deepen the country’s 5G infrastructure, estimated at over $30 billion, may not come from venture capitalists, who typically prefer smaller investments. Large corporations like Jio and Siemens, along with the government, are expected to drive innovation in this sector.
In the absence of significant private investments, the role of the government becomes crucial in incubating 5G-related start-ups. The government has plans to set up 100 labs for developing 5G services and has identified 100 universities, including IITs and regional engineering colleges, to engage with student start-up communities. Additionally, the telecom department has launched hackathons and partnership programs to support 5G start-ups and provide funding of around $120,000 per selected start-up.
While private players may be hesitant to invest in the current 5G landscape, some start-ups remain optimistic about their prospects. Niral Networks, a private operating system for 5G, has managed to sustain itself through revenue from its projects. Tech Eagle, a drone-based delivery start-up, believes that start-ups with genuine capabilities will continue to attract funding, albeit through a filtering process.
In conclusion, the slow adoption of 5G technology in India has posed significant funding challenges for start-ups relying on its potential. The lack of compelling use cases, unreliable network coverage, and the need for massive infrastructure investments have dampened investor interest. However, government initiatives and select start-ups’ genuine capabilities offer some hope for the future of 5G in India.
FAQs
1. Why are Indian start-ups facing funding challenges with the rollout of 5G?
The lack of demonstrable and differentiated use cases for 5G has resulted in tepid consumer interest, leading to a decline in investor funding for start-ups reliant on the technology.
2. What is hindering the adoption of 5G in India?
The patchy quality of the current 5G network is a major deterrent. The unreliable network coverage has not inspired confidence among private fundraisers.
3. What is the estimated investment required for 5G infrastructure in India?
It is estimated that over $30 billion is needed to deepen the country’s 5G infrastructure.
4. How is the government supporting 5G start-ups?
The government has proposed setting up 100 labs for developing 5G services and has identified 100 universities to engage with student start-up communities. Additionally, hackathons and partnership programs with funding support have been launched for 5G start-ups.
5. Are there any optimistic signs for 5G start-ups in India?
Despite the challenges, start-ups with genuine capabilities are expected to continue attracting funding, though through a filtering process. Some start-ups have managed to sustain themselves through revenue from their projects.
