India's startup ecosystem was deeply impacted by COVID-19 with 15 per cent of startups halting business operations due to lockdowns.
Despite the jolts due to COVID, the startup ecosystem is recovering faster than expected, in terms of demand and investor sentiment, both.
The findings are part of the TiE Delhi-NCR report, 'COVID-19 and the Antifragility of Indian Startup Ecosystem' on the impact of COVID-19 on the Indian startup ecosystem.
One of the big reasons for that is the shift of the consumer to digital channels for learning, fitness, ordering grocery, among others.
"Digitally-led segments have recovered much faster than anyone expected and in many spaces demand is well ahead of pre-COVID levels," said Rajan Anandan, President, TiE Delhi-NCR.
He adds, "We have been amazed to witness how quickly Indian founders have acted to reimagine their businesses. What has been most impressive is how many startups have reduced burn and improved their unit economics very rapidly."
The report finds that 75 per cent start-ups are gradually, but steadily, recovering post lockdown. Around 30 per cent of startups have pivoted to newer markets for alternative revenue streams, while more than 55 per cent of startups are focussing on profitability and reducing cash burn.
The investor sentiment has also recovered quickly. A testament to the fact is that four Indian startups became unicorns amid COVID-19, and India is on track to have eight unicorns in 2020 - almost the same number of additions as in 2019.
Also, total investments and the number of unique funded startups has recovered to pre-COVID levels during the quarter that ended in September 2020.
"We expect the Indian unicorn club to steadily expand through 2020 and 2021... the changes that the pandemic has brought on will make our ecosystem much stronger, across every dimension. India is on a path to have 100 unicorns by 2025," said Anandan.
These startups are also expected to create employment. Pari Natarajan, CEO, Zinnov, said, "Despite the trying times, and the death of many startups, the ecosystem has played a key role in employment generation and is expected to create approximately 15-16 Lakhs direct jobs by 2025."