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.
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.
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:
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
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
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
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
6. Continued growth in deeptech start-ups
Deeptech start-up ecosystem rises to 3,000+ companies
270 deeptech startups raised funding in 2021
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
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
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)
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.