With accelerated digital adoption post-COVID-19 opening several new avenues of growth and opportunities for Indian start-ups, calendar year 2020 saw over 1,600 tech start-ups and a record 12 unicorns emerging (the highest ever added in a single calendar year), even as the tech start-up base grew 8-10 per cent year-on-year.
According to the latest annual report on start-up by the National Association of Software and Services Companies (NASSCOM), despite a lower number of total start-up deals in 2020, the seed-stage investment is seeing a pick-up with the number of investors cutting cheques of lower ticket sizes going up . The seed-stage funding in 2020 recovered to more than 90 per cent of 2019 levels. Meanwhile, early and late-stage investments are also seeing a steady recovery with investors willing to take big bets. Sectors like EdTech, BFSI, AgriTech and Gaming, etc. are witnessing a steady increase in first-time funding owing to COVID-19 tailwind, up from 29 per cent in 2019 to 42 per cent in 2020. "The Indian tech start-up ecosystem's performance in 2020 has demonstrated the resilience and can-do spirit of the Indian entrepreneur. The continued innovation, right decision making and strong investor commitment have positioned the Indian start-up ecosystem as a key contributor in accelerating India's digital economic growth," Debjani Ghosh, President, NASSCOM says.
The deep-tech startups in particular are also witnessing increased interest from Venture Capital firms (VCs) and funding agencies with 14 per cent of total investments in 2020 going to deep-tech start-ups, up from 11 per cent in 2019. Further, 87 per cent of all deep-tech investments were in AI/ML start-ups. "While the investments in 2020 were significantly lower than in 2019, recovery in deal pace and investments is expected to return to 2019 levels, if not exceed in 2021. In terms of total Unicorns, India is on track to have a 50-plus strong Unicorn club in 2021" the report said. While M&A deals and IPO pipeline are also expected to accelerate this calendar year, being cautiously optimistic, the report expects normalcy to return for Indian tech start-up ecosystem in 2021. "With the continued addition of new start-ups, booming unicorns and increased adoption of deep-tech, the ecosystem shows an even more promising future. Depending on headwinds, 2021 promises to be a positive year for Indian tech start-ups - marching steadily towards $1 trillion digital economy goal," Debjani adds.