With India shaping the next wave of digital transformation, startups continue to witness a rapid growth trajectory, creating an ecosystem of un-hindered technology innovation. The National Association of Software and Services Companies (NASSCOM), in collaboration with Zinnov, released its annual startup study, titled “Indian Tech Start-up Ecosystem: Year of The Titans”. With rising investor confidence, startups leveraging deep-tech, and tapping unexplored talent pool, the Indian tech startup base continues to witness steady growth, adding over 2250 start-ups in 2021.
Startups raised US$ 24.1 billion in 2021, a two-fold increase over pre-Covid levels. In comparison to 2020, there was a 3X increase in number of high value deals (deals > US$ 100 million), demonstrating investor confidence with a pool of active Angel investors of 2400+ and a readiness to take significant risks. While the United States remains the leading source of foreign direct investment in startups, worldwide involvement is also growing. Fifty per cent of the deals had at least one India-domiciled investor.
The startup ecosystem saw a 2X gain in cumulative valuation from 2020 to 2021, with an estimate of US$ 320 – US$ 330 billion, demonstrating the sector’s development and recovery throughout the pandemic. In the last decade, the ecosystem has played a key role in growing direct and indirect job opportunities, providing 6.6 lakh direct jobs and more than 34.1 lakh indirect jobs. The industries that saw the most net new job creation were BFSI, edtech, retail and retail tech, foodtech, SCM and logistics and mobility. On the back of internet commerce, freelancers, and service industries, indirect jobs have also recovered.
Speaking on the occasion, Debjani Ghosh, President, NASSCOM said, “The performance of the Indian startup ecosystem in 2021 has proved the resilience and dedication being put by multiple startups across segments. The ecosystem has grown immensely and positioned itself as a vital contributor to the growth of India’s digital economy. With record-breaking funding, an increase in the number of unicorns, jobs being created in the near term, the Indian startup ecosystem’s future looks even brighter going ahead in 2022.”
Pari Natarajan, CEO, Zinnov opined, “When compared to the UK, US, Israel, and China, 2021 has been an outstanding year for the Indian startup ecosystem, with the highest growth rate in terms of deals, both in seed stage and late-stage funding, and number of startups. Indian firms have done an outstanding job of selling into global markets, notably in categories such as global SME and developer ecosystem. The fact that Indian startups are digitally native serves as an excellent model for digital native enterprises throughout the world. I believe that Indian startup ecosystem is just getting started. It’s Day Zero and we are super excited about the potential of the startup ecosystem over the next decade, onwards and upwards.”
Factors such as Building for Bharat, Investments, Talent Availability, and Ecosystem Support are driving entrepreneurs to use emerging hubs to create businesses. Entrepreneurs are developing solutions for the entire country, with a focus on fundamental and core requirements, localisation, and the promise of delivering equality to the masses. Established start-up centres like Delhi-NCR, Bangalore, Chennai, Pune, Hyderabad and Mumbai account for 71 per cent of all startups. Outside of the developing start-up centres like Jaipur, Kochi, Kolkata, Chandigarh, and others, 29 per cent of all startups are located.
Diversity and inclusion are becoming hallmarks of the Indian tech startup ecosystem, as evidenced by the fact that at least one-woman founder/co-founder is present in 12-15 per cent of startups and 10 unicorns. Women-led start-up success stories, academia-led efforts, business programmes, and government initiatives are driving the inclusion and diversity flywheel.
India’ unique technology infrastructure has undoubtedly redefined problem-solving approach of the technology landscape. It is fueling development and deployment of new technology infrastructure across all key sectors to meet the US$ one trillion Digital Economy goal. Not only this but even India Stack has considerably increased India’s total addressable market. Startups are utilising stack to create novel products and scale swiftly. And the increasing trustworthiness of these firms in BFSI, healthcare, and agritech bears witness to this. There have been over 80 digital efforts in the agritech industry, as well as over 500 plans and programmes to solve data discrepancies and the fragmented character of public service. Even in the health-care sector, there has been a digital revolution, and a large number of individuals have benefited from it.
Although cautiously optimistic, in 2022 Indian startup ecosystem will continue to make headlines and strengthen at the core. Few priority areas that can further fuel the growth of the startup ecosystem are encouraging tech startups to innovate for India, retain the best digital talent in the country, procurement reforms to enable startups scale, create avenues for attracting foreign investments into Indian startups, and grow global thought leadership for “World class from India”.