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Business EconomyPosted at: Feb 15 2023 1:08PM


Nasscom Zinnov releases Indian Tech Start-Up landscape report 2022

Kolkata, Feb 15 (UNI) The National Association of Software and Services Companies (NASSCOM), in collaboration with Zinnov, on Wednesday released the key findings of the Indian Tech Startup 2022, titled, “Rising Above Uncertainty: The 2022 Saga of the Indian Tech Start-ups.”

2022 can be defined as the year of reconciliation, reset, and resilience, for the tech start-up ecosystem in India. The report finds that India continues to be the 3rd largest tech start-up
ecosystem globally, with over 1300 active tech start-ups added in CY2022, taking the total tally
of active tech start-ups to 25,000-27,000. The country added the 2nd highest number of Unicorns
in the world, with over 23 added in the CY2022. Simultaneously, the potential pipeline of Unicorns expanded to over 170, growing at a pace equivalent to 2021.

The year 2022 has been challenging for the tech start-up ecosystem across many fronts. However, despite the headwinds, while total funding in CY2022 dropped 24% over 2021, the annual investments at $18.2 Bn in CY2022 were higher than the pre-pandemic levels of $13.1 Bn in 2019. The year also witnessed a significant investment focus on non-Unicorns and unique start-ups. Almost 1400 unique start-ups received funding in 2022, 18% higher than in 2021. Amongst these, 47% of start-ups raised their first round in 2022.

Interestingly, despite the slowdown, 2022 emerged as the year that witnessed the highest seed and early-stage investments between 2019 and 2022. The study reveals that both early-stage ($5.9 Bn in CY2022) and seed-stage ($1.2 Bn in CY2022) investments grew between 25%-35% over 2021.
In 2022, tech start-ups in the seed-stage secured 1018 investments. Late-stage investments bore
the brunt with a decline of 41% in deal sizes greater than $100 Mn. This was due to considerable correction in the global public markets, particularly in technology stocks that saw a significant drop
in valuation. Interestingly, non-unicorns received 66% of the total investments in CY2022.

2022 saw 30% higher corporate participation as compared to 2021. Over 300 corporates are actively investing, acquiring, or partnering with tech start-ups. The year also witnessed a shift in the founder’s playbook. 30% of Unicorns and Potential Unicorns invested, acquired, or actively collaborated with other start-ups in H12022. The trend is similar to 2021; however, up by 22% from 2020.

Further, with increased adoption of technology-led solutions by end customers and players across the value chain, nascent sectors such as Agri-Tech, Industrial, Manufacturing, Energy & Utilities have witnessed growth in equity investments.

Debjani Ghosh, President, NASSCOM, said, “Navigating from an era of abundance to the era of constraints, the Indian tech start-ups need to look beyond valuations to value creation and scaling up. Despite the current downturns, opportunities abound for innovative companies that are leveraging emerging technologies to create actionable impact while prioritizing business fundamentals over growth.”

Pari Natarajan, CEO, Zinnov, said, “In the face of market headwinds, a long funding cycle, and reduced valuations, Indian tech start-ups held strong in 2022. Instead, they focused on growth, partnerships, and collaboration – by thinking through the first-principles lens. In fact, Indian tech
start-ups are moving back to the fundamentals of technology with many DeepTech start-ups emerging, that are new to India, new to the world. What is remarkable is the ecosystem’s maturity, where founders are intentionally prioritizing profitability over valuation and the investor trust,
despite macroeconomic variables at play. This will pave the way for growth in 2023 and beyond.”

NASSCOM and Zinnov also conducted a survey with over 100 start-up founders from various funding stages and industry sectors. The survey findings reveal that access to quality talent, low customer uptake, and cash flow crunch were amongst the primary challenges that founders faced in 2022. This has prompted Indian tech start-ups to not just adapt to market shifts and look at growth, not just survival, with a dual focus on customers and investors in 2023.

Business expansion along with fundraising are amongst the top priorities for funded start-ups in 2023. Around 44% of the surveyed founders place business expansion as their immediate business priority over the next 6-12 months.

Tech start-ups are expected to continue increasing their technology innovation and deep-tech adoption, particularly in areas related to SDGs (Sustainable Development Goals) that require complex solutions. They are likely to continue to drive real-world applications in areas such as Quantum Computing, Web3, AI/ML, Aerospace, and the Circular Economy, amongst other technologies.
UNI BM KK
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