The year of tech unicorns: India's startup ecosystem sees record-breaking growth

The NASSCOM Tech Startup Report 2021 highlights 2021 as the year of unparalleled growth in the Indian tech start-up ecosystem, specifically in unicorns, funding, merger and acquisitions, and investors.
Written by Vala Afshar, Contributing Writer

NASSCOM is the premier trade body and chamber of commerce of the tech industry in India and comprises over 3000 member companies including both Indian and multinational organizations that have a presence in India. Prime Minister Shri Narendra Modi, referred to NASSCOM as a "revolution," beyond its time-tested role as an association.

The 2021 edition titled "NASSCOM Tech Start-up Report 2021 – Year of the Titans" was released today by Minister Shri Piyush Goyal, and this year's report underlines how 2021 was the year of unparalleled growth in the Indian tech start-up ecosystem. Many records have been broken and new ones established this year across different parameters: unicorns, funding, merger & acquisitions, investors, and more. The report also highlights key aspects of the ecosystem which is strengthening its core such as rising inclusivity and diversity, intensifying corporate participation, deepening investors' commitment, and much more. The report also puts forth some proactive measures that would allow us to accelerate, and de-risk, the tech start-up ecosystem growth.  

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Debjani Ghosh, President NASSCOM

Debjani Ghosh is the President of the National Association of Software & Services Companies (NASSCOM) since April 2018.  NASSCOM, a not-for-profit industry association, is the apex body for the 194 billion dollar IT BPM industry in India, an industry that had made a phenomenal contribution to India's GDP, exports, employment, infrastructure, and global visibility. 

"Indian startups are fast becoming the champions of India Inc's growth story with the number of direct and indirect jobs being created - driving significant economic and social growth. Not to mention the 2X increase in private market valuations. In 2022, the Indian startup ecosystem is poised to catapult its journey, with continued momentum across investments, M&As, IPOs, and unlocking value from breakout verticals such as Agriculture, Gaming, Blockchain, Web3, Automotive, Industrial and Manufacturing," noted Ghosh and Pari Natarajan, CEO of Zinnov, in the NASSCOM Tech Startups Report 2021. 

Here are some of the key takeaways of the  NASSCOM Tech Startups Report 2021: 


Snapshot of the Indian tech startup ecosystem in 2021

An unforgettable year for tech start-ups:

  • 2250+ tech start-ups founded, taking total base to 25,000-26,000
  • 42 unicorns added, up by 3.5X from last year
  • $ 24.1 billion funding, up by 3X from last year
  • 58% of all tech startups funded in 2021 raised their first round, up 13% from 2020

India added the 3rd highest number of technology startup unicorns in 2021

Ecosystem becoming more inclusive and diverse

  • 29% of all tech start-ups based outside established hubs
  • 10-15% of tech start-ups have at least one-woman founder/co-founder
  • 48% of the tech start-ups are building solutions for India 1 and India 2 income group

India tech startup ecosystem continues to strengthen at its core

Increasing breadth and depth in sectors

  • BFSI accounts for 13 Unicorns, 35 potential unicorns, and 25% of investments in 2021
  • 35% of investments went to Retail and Retail Tech, EdTech, Food Tech, SCM, and Logistics
  • A significant uptick in Agriculture Tech, Automotive, Social Platforms, Industrial and Manufacturing

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    The foundation of India's tech startup ecosystem is strong 

Intensifying corporate and investors participation:

  • 260+ unique corporates active in 2021; up from 170+ in 2020
  • 750+ unique institutional investors active in 2021; 1.8X of participants in 2020
  • 3X more investors participated in mega-rounds (deals > $ 100Mn)
  • 750+ unique institutional investors active in 2021; 1.8X of participants in 2020
  • 3X more investors participated in mega-rounds (deals > $ 100Mn)

2021 growth rates in India's tech startup ecosystem were far greater than pre-pandemic highs

M&A pace rebounded massively with more than 70% growth over 2019

  • 180+ M&A deals in 2021
  • 66% of acquisitions led by Indian startups
  • 5-7 years average of targets
  • 52% of acquired startups were B2B

M&A pace was at record levels in 2021 for Indian tech startups

2021 was a defining year for public offers with 11 tech startups getting listed in India and overseas

  • $6.2 billion total capital raised via public market listing
  • $47.8 billion cumulative market capitalization (of the startups that raised IPO in 2021)
  • 67X average over-subscription (for the startups that listed IPO in 2021) 

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2021 was a defining year for India's tech IPO debuts 

Here are 10 powerful statistics that highlight the record year in India's technology startup ecosystem: 

1. India's tech start-up further cemented its place in the global start-up landscape 

    • 3rd largest base for tech-startups
    • 3rd highest number of new technology startup unicorns in the world
    • 2nd highest growth rate of funding
    • Fintech startups outpacing the world in terms of digital payment adoption in India

2. India's technology start-up ecosystem has expanded to a large pool of 25-26,000 startups that have been set up in the last ten years.

    • In comparison, when NASSCOM published the first edition of this report in 2014, the number was 3,000
    • In 2021 alone, India added 2250 startups, the highest addition in any year to date

3. Start-ups are key for the country as they fuel innovation, value creation, and the multiplier impact on the economy

    • In 2021, startups employed over 6.6 million people directly and over 34 million indirectly 
    • 10-12% growth in both direct and indirect jobs

4. Three words that defined the start-up landscape in 2021 – Funding, Unicorns, and Exits

    • $24 billion in funding, 40+ unicorns, 11 IPOs, and 198 M&A deals

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India's technology startup ecosystem covers multiple industries 

5. Top 4 growth sectors –Fintech, Retail Technology, Education Technology, and Enterprise tech are no surprise

    • Huge opportunity in the SaaS sector and Indian products coming of age
    • Startups are innovating in micro verticals – each of which has the potential to be multi-billion dollar opportunities.
    • Unicorns being born in the space of social commerce, vertical SaaS, neobanking, and fintech interoperability are reflective of how technology is permeating every business irrespective of size or location

    Distribution of equity investments by sector - India tech startup ecosystem 

6. Continued growth in deeptech start-ups

    • Deeptech start-up ecosystem rises to 3,000+ companies
    • 270 deeptech startups raised funding in 2021

India is poised to become the home of tech startups

 7. Growing list of soon-icorns

    • Soonicorns (tech startups that have raised $50 million in cumulative funding to date) or potential unicorns is also growing
    • NASSCOM expects 135+ companies to potentially become unicorns in the next few years

8. While unicorn creation dominated attention, we are very excited about the growth of funding for early-stage companies

    • Almost 700 companies raised their first round in the year
    • Seed and early-stage funding was at $5 billion, a 2X growth over the past year

Women led Indian startup success stories are becoming more common

9. The diversity of the start-up ecosystem is also maturing

    • 29% of tech startups come from non-leader hubs
    • 12-15% of startups have women co-founders
    • 20% of startups are focused on low-income markets

Nearly 1 in 3 tech startup unicorns in India were outside major hubs

10. 2025 India Tech Startup Projections

    • 36,000-37000 Tech start-ups
    • Unicorn pool will continue to expand to 100+ (95-100 by end of 2022, 180-200 by 2025)
    • $600-700 Billion industry valuations

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The "NASSCOM Tech Start-up Report 2021 – Year of the Titans" is the most comprehensive report on India's booming technology startup sector. The report projects that through 2022, Indian startups will continue to garner headlines and scale to new highs. With $24.1 billion across 1,400 deals, investments in 2021 were 3X compared to $8.2 billion in 2020. The report estimates that India will see 2-3X growth in IPO filings and listings. For 2022, the report suggests that we will see more than 11 IPOs to a forecast of 15-20 IPOs. The report forecasts 95-100 unicorn tech startups by end of 2022. The NASSCOM summary of the tech startup ecosystem and progress to date, including future projections, makes this report a must-read.

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