Indian tech startup base saw nearly 10% growth in 2020: Nasscom
Despite a lower number of total start-up deals in 2020, seed-stage investments are recovering at a good pace as investor activity at lower ticket sizes has increased.
Parul January 18, 2021
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With over 1,600 tech start-ups and a record number of 12 additional unicorns added in 2020 — the highest ever in a single calendar year — the Indian tech start-up base witnessed a steady growth at a scale of 8-10 per cent (year-on-year), said Nasscom.
Nearly 14 per cent of total investments in 2020 were in 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, according to the annual report by Nasscom in partnership with a global management and strategy consulting firm Zinnov.
“With the continued addition of new start-ups, booming unicorns and increased adoption of deep-tech, the ecosystem shows an even more promising future,” said Debjani Ghosh, President, Nasscom.
Despite a lower number of total start-up deals in 2020, seed-stage investments are recovering at a good pace as investor activity at lower ticket sizes has increased, the report mentioned.
Seed-stage funding in 2020 recovered to more than 90 per cent of 2019 levels. “Early and Late-stage investments are also recovering steadily. An increase in median deal size is further underscoring investor confidence and a willingness to take big bets,” the report added.
Sectors with Covid-19 tailwinds such as EdTech, BFSI, AgriTech, Gaming, etc., are witnessing a steady increase in first time funding, up from 29 per cent in 2019 to 42 per cent in 2020, garnering a 14 per cent growth in absolute numbers.
Investor sentiment is also recovering with the second half of 2020 funding up by two times over the first half. “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,” said Pari Natarajan, CEO, Zinnov.
Remote working continues to see significant adoption amongst tech start-ups, with around 30-35 per cent offering remote roles and 15-20 per cent companies having committed to remote work culture, as per NASSCOM tech start-up survey.
2021 promises a return to normalcy for the Indian tech start-up ecosystem.
“Deep-tech and new start-up hubs will continue to grow at 40-45 per cent CAGR. 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,” the report noted.
In terms of total unicorns, India is on track to have a 50-plus strong Unicorn club in 2021.