The Indian technology startup ecosystem continues to be on a growth trajectory on the back of rapid digitalization and tech adoption as we emerge from the pandemic. At least 12 more startups will join the unicorn club in 2021, taking the total count of to 50 from the current 38. The potential unicorn pipeline remains strong with 1.5X growth since 2019, according to a report by Nasscom, in partnership with Zinnov, a global management and strategy consulting firm.
In 2020, a record of 12 unicorns were added, the highest ever in a calendar year, with 58% of these being B2B tech start-ups. Some of these include Razorpay, PineLabs, Zerodha and Postman. Fintech startup Paytm is India’s highest valued unicorn, at $16 billion, followed by edtech start-up Byju’s.
Unicorns are valued at at least $1 billion.
Nasscom said the initial public offering (IPO) pipeline among startups will also strengthen in 2021-22, with a number of profitable firms like Freshworks, Druva, PolicyBazaar and Delhivery announcing plans to list their shares in the near future.
Earlier this week, Mint reported that cosmetics e-tailer Nykaa is looking at a stock exchange listing by the end of this year or early 2022 at a valuation of over $3 billion, joining e-commerce leaders such as Flipkart, Zomato and Pepperfry preparing for the public markets.
The IPO by Nykaa, which was founded eight years ago, will be the first by an online beauty marketplace in India.
According to the report, deep-tech adoption is increasing and is expected to accelerate further. This has led to significant momentum in the deep-tech space with increased interest from Venture Capital firms (VCs) and funding agencies to invest in deep-tech start-ups. 14% of total investments in 2020 were in deep-tech start-ups, up from 11% in 2019. Further, 87% of all deep-tech investments were in Artificial Intelligence/Machine Learning start-ups, in 2020.
“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 $1Tn digital economy goal,” said Debjani Ghosh, president, Nasscom.
Sectors with covid-19 tailwinds such as edtech, agritech and gaming are witnessing a steady increase in first time funding, up from 29% in 2019 to 42% in 2020, garnering a 14% growth in absolute numbers. In 2020, Indian tech start-ups not only managed to stay afloat amidst uncertainties and rapid experimentations, but also strategically strengthened their playbook by converting the crisis into opportunity. As a result, Indian enterprises’ Digital Maturity has jumped to 55% in 2020 from 34% in 2018.
Remote working continues to see significant adoption amongst tech start-ups, with around 30-35% offering remote roles and 15-20% companies having committed to remote work culture, as per the Nasscom report. Further, with rising digital adoption and remote working reducing geographical disadvantages, tech start-ups are expanding into global markets with 28-30% tech start-ups targeting the overseas market for growth and business expansion.
However, as normalcy returns for start-ups in the New Year, certain proactive measures are required to ensure the continued momentum and growth. These include government investment in building infrastructure and strengthening policies, ecosystem collaboration for market access for early stage start-ups, acceleration of corporate participation and increasing seed-stage investments for tech startups, which is currently less than 10% of the total investment received each year.
“2020 saw start-ups increasingly leveraging and piggybacking on the foundational infrastructure that the government has in place – the India Stack, UPI infrastructure, GST norms, FASTag, etc. – that offers up a unified set of layers with contactless and presence-less digital economy truly coming into its own,” said Pari Natarajan, CEO, Zinnov.
This led to a bunch of start-ups like Khatabook and Udaan, not only innovating on top of these layers, but bringing in the underserved tier-2/3 cities into the larger digital economic inclusion mix.
Natarajan said that 2021 will be the ‘Decade of Collaboration’ where entrepreneurs engaging more with not just their peers but also with the government, corporates and the manufacturing ecosystem, will catapult India’s dreams of becoming a trillion-dollar economy.