The funding challenges faced by Indian startups in 2022 and 2023 seem to have spurred growth and maturity in the country’s startup ecosystem. According to a study by Nasscom and Zinnov, about 60% of startup founders reported increased revenue and profitability in 2023.
The report ‘Weathering The Challenges- The Indian Tech Startup Landscape Report 2023’ revealed that a significant portion of unfunded tech startup founders anticipate higher revenues in 2024 compared to their funded counterparts. Tech startup founders are navigating 2024 with a focus on optimizing expenditure and maximizing profitability, especially for B2B tech startups.
Debjani Ghosh, President of Nasscom, commented on the maturation of India’s tech startup ecosystem, stating, “India’s tech startup ecosystem has truly matured, attracting more than $70 billion in cumulative funding between 2019 to 2023. This growth is now anchored in a strategic shift towards improving business metrics and revenue streams.”
Ghosh highlighted the need for acceleration in DeepTech, which currently accounts for 14% of the funding. She emphasized the importance of building India’s DeepTech ecosystem and commended the resilience shown by the proliferation of tech startups in Tier-II and III cities.
The report emphasized India’s position as the third-largest tech startup ecosystem globally, with over 950 tech startups founded in 2023, contributing to a total of more than 31,000 tech startups in the last decade. The cumulative funding for these startups from 2019 to 2023 has exceeded $70 billion.
The use of deep technologies is becoming mainstream, with Indian startups leveraging them to improve organizational efficiency, reduce operational costs, and automate internal operations.
The democratization of tech in 2023 has led Indian tech startups to diversify into Tier-II and Tier-III locations, with 40% of tech startups established in emerging hubs. Business model innovations in core sectors such as Automotive, Industrial, and Manufacturing have recorded stability, with an increase in funding share.
Despite reports of layoffs in the startup sector in 2023, the survey of over 100 startup founders revealed that over 65% of them have done moderate hiring in 2023.
The report predicts continued growth in investments in DeepTech in 2024, with 70% of startup founders incorporating Artificial Intelligence into their solutions.
Pari Natarajan, Chief Executive Officer at Zinnov, commented on the resilience and growth of India’s tech startup ecosystem, stating, “Despite funding headwinds – including valuation corrections, selective capital allocation, and regulatory changes- India’s tech startup ecosystem continues to grow at an impressive clip. DeepTech, a burgeoning sector, is gaining prominence, and Tier-II/III cities are transforming into new innovation hubs, decentralizing the startup landscape. The India startup story is no longer about just scale and innovation but also efficiency and adaptability – all building blocks of sustainable value.”
