With the increasing use of technology and the growing adoption of digital India initiatives, there has been a rising demand for digital products and services. This has created opportunities for startups in areas such as e-commerce, fintech, healthcare, and education.
India added over 1,300 active tech startups last year, taking the total tally of active tech startups to 25,000-27,000, a Nasscom report said on Wednesday.
India continues to be the third largest tech startup ecosystem globally (after the US and China).
During this economic uncertainty, investors may be more cautious about investing in new businesses. This can make it more difficult for startups to raise the capital they need to get off the ground or to continue operating.
Innovative startups should consider this downturn an opportunity by introducing new ideas, building strong relationships with customers, managing costs carefully, and staying agile and adaptable; startups can position themselves to weather economic storms and emerge stronger on the other side.
“Despite the current downturns, opportunities abound for innovative companies that are leveraging emerging technologies to create actionable impact while prioritising business fundamentals over growth,” said Debjani Ghosh, President of Nasscom.
Despite the headwinds, while total funding in CY2022 dropped 24 percent over 2021, the annual investments at $18.2 billion were higher than the pre-pandemic levels of $13.1 billion in 2019.
The year also witnessed a significant investment focus on non-unicorns and unique startups.
Almost 1,400 unique startups received funding in 2022, 18 percent higher than in 2021. Among these, 47 percent of startups raised their first round in 2022, the report mentioned.
Both early-stage ($5.9 billion in CY2022) and seed-stage ($1.2 billion) investments grew between 25-35 percent over 2021.
In 2022, tech startups in the seed stage secured 1,018 investments.
Late-stage investments bore the brunt with a decline of 41 percent in deal sizes greater than $100 million, due to considerable correction in the global public markets.
“What is remarkable is the ecosystem’s maturity, where founders are intentionally prioritising profitability over valuation and the investor trust, despite macroeconomic variables at play. This will pave the way for growth in 2023 and beyond,” said Pari Natarajan, CEO, Zinnov.
Tech startups are expected to continue to evolve and play an essential role in the economy, despite the challenges.
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