Analyzing The Indian Start-up Funding Ecosystem from 2018 to 2021 Using the CRISP-DM Framework
Published: 2024-03-24 22:27:12

INTRODUCTION:
The Indian economy is one that has risen to the fifth largest on average by nominal GDP. It is massively driven by the service sector even though the agriculture and industry sectors employ most of India’s labor force.
For every thriving economy, the part played by small and medium scale businesses cannot be overlooked. But for these businesses to make a meaningful impact on the economy, they have to survive the first few years of commencing business. The first few years are critical to survival which is why a look into the Indian start-up funding ecosystem will no doubt have a lot to teach the world.
For the analysis of the Indian start-up funding ecosystem, we shall be applying the CRISP-DM framework. 
This is an approach which provides a structured, flexible, and iterative process that improves project management, communication, and ultimately, the quality of insights derived from data.


In today's competitive business landscape, understanding and predicting customer churn is crucial for businesses to maintain profitability and growth. Customer churn refers to the rate at which customers stop doing business with a company over a given period. In this article, we will explore how the CRISP-DM (Cross-Industry Standard Process for Data Mining) framework can be applied to analyze customer churn in a telecommunications company.

1.BUSINESS UNDERSTANDING
The first step in the CRISP-DM framework is to understand the business objectives and requirements. In our case, we will take a look into the data (sourced from DAP Database) in order to gain insights as to how the start-up funding works, the micro-sectors that are involved in the process, and the caliber of investors drawn to Indian start-ups.
The goals of this analytical enquiry include:
- to understand the trends in start-ups funding
- to identify top sectors that attract the most investment
- to recognize top investors in the ecosystem

In order to achieve the aforementioned goals, the following business questions were formulated.
- What are the noticeable funding trends in the ecosystem?
- What is the distribution of funding by industry?
- What trends exist between a start-up’s location and the amount of funding received?
- Who are the top investors in this ecosystem?
- Which are the top sectors favored by the top 3 Investors?

2. DATA UNDERSTANDING:
2.1	Data Collection: Datasets for Indiand Start-up funding for the years 2020 and 2021 were sourced from the DAP Database. The one for 2019 was sourced from OneDrive while the one for 2018 was sourced a github repository.

2.2	Data Description: There were 526 records for the 2018 dataset, 89 for 2019, 1055 for 2020, and 1209 for 2021. Altogether, there were 2,878 records to work with. Not all fields(columns) were identical. Some years had fewer fields than others. For instance, the 2018 dataset had fewer fields, but had fields that were related to those found in other years. A year column was created in order to appropriately capture the time period of all four (4) datasets. Of the ten (10) common fields, three (3) are of numerical data types while the rest held categorical data types.

2.3	Data Exploration: As earlier said, the 2018 dataset had to be improved upon. There was an Industry field which held more information regarding the various sectors to which each start-up belonged. To that end, a Sector field was created which extracted just one word from the Industry field. Also, a Location field held information containing a start-up’s city, province/state and country of operation. So a Location field was created in order to extract just the city part from each record.
It was discovered that the Amount column held values with and without currency symbols. Those with currency symbols were converted to US dollars from rupees, while the ones without currency symbols were assumed to be in US dollars.
Next, we need to gather and understand the data relevant to our analysis. This may include customer demographics, usage patterns, service history, and churn status. We will explore the data to identify any patterns or trends that may be useful for predicting churn.

3. DATA PREPARATION:
Once we had our datasets ready, we proceeded to merge them, then pre-process and clean the new dataframe to ensure its quality and make it ready for our analysis. The process included handling of missing values, dropping of unneeded records due to inconsistent entries, dropping of unnecessary fields, mapping of  categorical fields to reduce the number of categories, and removal of duplicate records. The field for Amount was imputed with the mean value for records where no value was specified. After all the steps for data cleaning and data preparation were completed, there were 2,144 records available for analysis.

4. ANALYSIS:
4.1	UNIVARIATE ANALYSIS: A univariate analysis of the dataset was conducted.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/ilk1fr293y9jw7hc2jo1.png)


As can be seen from the image above, the Amount variable had a mean value of $101,098,600, with minimum and maximum values of $876 and $150,000,000,000 respectively, and a standard deviation of approximately $3,239,380.
The Year variable had a mean of 2020, a minimum and maximum of 2018(the start year) and 2021(the end year), and a standard deviation of 1.
The Years of existence variable had a mean of 3years, a minimum and maximum of 0years and 5years respectively, and a standard deviation of 1.
The distribution of numerical variables is presented below.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/pbuij874tnqgzy0t1ewx.png)


4.2 CATEGORICAL VARIABLES: The Univariate distribution of Main Sector, Industry, Stage, and HeadQuarter variables are presented below


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/6w1gkn57n3ltm6y8bz56.png)

The Bar chart above shows Technology, Fintech, and Food & Beverages as the Top three (3) sectors with high frequency of getting start-up funding.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/l2o8fqpgcjlvrfaarrc5.png)

The Top three industries that start-ups are associated with within the 2018 to 2021 period were Technology, Finance and Business.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/35i8yuin0tw3smf9pypw.png)

The above chart shows the distribution of start-up Stages in the ecosystem.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/p6e2zc4s4d45lwlt5d6z.png)


The chart above shows the distribution of start-ups by their business location.


4.3	BIVARIATE ANALYSIS
We looked into the relationships that exists between some select categorical and numerical variables and present these findings.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/pjknwf4pybzyjhx6f9ms.png)



The above Column chart shows that Fintech was the top main sector to receive the highest amount of funding.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/wfhl4zg6qn3q1gdgb8no.png)


From the image above, we can see that the top 10 Main Sectors by Years of Existence. They include Transport & Logistics, Fintech, Food & Beverages, Healthtech, Business, E-commerce, Healthcare & Wellness, Technology, Edtech, and Finance in no particular order.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/xuxckvyvnphji3wthhen.png)


The above chart shows Finance as the Top Industry with the highest amount of funding.



![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/9gmo3nkv307fu1ey5mj7.png)


The above chart shows the distribution of Stages by the amount of funding received.

5. DEPLOYMENT:
We attempted to profer solutions to the Business questions stated in the Business Understanding section above.

- HOW HAS THE FUNDING TREND CHANGED OVER THE YEARS?

![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/ged1ghhewq7vut7tsvfd.png)

Much of the fundings to start-ups happened in 2021, followed by 2020, then 2018 and finally in 2019. It is not surprising at all. This trend reflects the number of records available for each of those years.

- WHAT IS THE DISTRIBUTION OF FUNDING RECEIVED BY INDUSTRY?


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/kdxu4x1l2akfhz0a582c.png)

Per the Column Chart above, the bulk of funding goes to the Top Seven Industries which are Finance, Technology, Business, Food & Beverages, Health, Education, and Transport.

- WHICH CITIES/REGIONS HAVE ATTRACTED THE MOST FUNDING FOR START-UPS?


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/npeolmj0ho1vv54jtk2m.png)

The top five (5) cities that attract funding to start-ups are Mumbai, Bangalore, New Delhi, Delhi, and Pune. It is clear that locating a start-up in Mumbai would help attract more funds for the business.

(4)WHICH CITIES/REGIONS HAVE ATTRACTED THE MOST NUMBER OF START-UPS?


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/nvx9c37e5m5lho71u09w.png)

Even though Gurugram did not make the Top five cities that attract fundings for start-ups, it appeared as one of the Top five cities to attract start-ups.

- WHO ARE THE MAJOR INVESTORS IN THE ECOSYSTEM?


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/mkbgy0zh0gvof3hkntz0.png)
The top investor in the ecosystem is Inflection Point Ventures, with Titan Capital coming in fifth place. There seems to be some sort of level from Kalaari Capital to Chiratae Ventures.

(6)WHICH INDUSTRIES DO THE TOP THREE INVESTORS PREFER TO INVEST IN?


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/qwmmt1swpl328i21umjf.png)
The Bar Chart above shows that Inflection Point Capital prefers to invest in start-ups that are found in the Technology, Business, and Education Industries.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/21pfxfht3k53jq1w67uu.png)
Venture Catalysts prefers to invest in start-ups that are associated with the Food & Beverages, Business, and Education industries.


![Image description](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/ureefghd8sf997rblu7b.png)

Start-ups that venture into the Transport, Hospitality, and Education industries are favored by Mumbai Angels Network.

CONCLUSION:
Based on the analysis conducted on the Indian start-up funding ecosystem from 2018 to 2021, several key insights and trends have been uncovered.

- FUNDING TRENDS:
The analysis revealed a significant increase in funding for start-ups over the years, with the highest amount of funding observed in 2021.
This trend reflects the growing interest and investment in the Indian start-up ecosystem, indicating a positive outlook for the future.

- DISTRIBUTION OF FUNDING BY INDUSTRY:
The bulk of funding is concentrated in seven key industries: Finance, Technology, Business, Food & Beverages, Health, Education, and Transport.
This distribution highlights the sectors that are attracting the most investment and may present lucrative opportunities for entrepreneurs and investors alike.

- CITIES ATTRACTING FUNDING:
Mumbai, Bangalore, New Delhi, Delhi, and Pune emerged as the top cities attracting funding for start-ups.
Locating a start-up in these cities may provide access to a thriving ecosystem and increased opportunities for funding and growth.

- MAJOR INVESTORS:
Inflection Point Ventures emerged as the top investor in the ecosystem, followed by other prominent players such as Titan Capital and Kalaari Capital.
Understanding the preferences of these investors can help start-ups tailor their pitches and strategies to attract funding.

- PREFERRED INDUSTRIES OF TOP INVESTORS:
Analysis of the investment preferences of top investors revealed their focus on specific industries.
For example, Inflection Point Ventures showed a preference for Technology, Business, and Education sectors, while Mumbai Angels Network favored Transport, Hospitality, and Education industries.
Finally, the analysis provides valuable insights into the Indian start-up funding ecosystem, highlighting emerging trends, key players, and areas of opportunity. By leveraging these insights, stakeholders can make informed decisions, identify potential investment opportunities, and contribute to the continued growth and success of the Indian start-up ecosystem.