India’s tech startup ecosystem witnessed remarkable growth last year, with over 1,300 active tech startups added, bringing the total tally to an impressive 25,000-27,000, as per a report released by Nasscom on Wednesday.
Maintaining its position as the third-largest tech startup ecosystem globally, India also emerged as a hotspot for unicorn companies, with over 23 unicorns added in CY2022, the second-highest globally.
The report, developed by the National Association of Software and Services Companies (Nasscom) in collaboration with Zinnov, highlights the expanding pipeline of potential unicorns, which has now surpassed 170, growing at a rate equivalent to the previous year.
Debjani Ghosh, President of Nasscom, emphasized the abundant opportunities available for innovative companies leveraging emerging technologies to drive actionable impact while prioritizing sound business fundamentals.
Despite facing challenges, the total funding in CY2022, although dropping by 24% compared to 2021, amounted to $18.2 billion, surpassing pre-pandemic levels observed in 2019. Notably, there was a significant investment focus on non-unicorn and unique startups.
In 2022, nearly 1,400 unique startups secured funding, marking an 18% increase from the previous year. Of these, 47% raised their first round of funding, signaling a vibrant early-stage investment landscape.
Both early-stage ($5.9 billion) and seed-stage ($1.2 billion) investments experienced healthy growth of 25-35% compared to 2021. Seed-stage tech startups secured a total of 1,018 investments in 2022.
However, late-stage investments witnessed a decline of 41% in deal sizes exceeding $100 million, attributed to corrections in the global public markets.
Pari Natarajan, CEO of Zinnov, highlighted the ecosystem’s maturity, with founders prioritizing profitability over valuation, fostering investor trust despite prevailing macroeconomic uncertainties. This trend is expected to fuel growth in 2023 and beyond.
Looking ahead, tech startups are poised to drive innovation and adopt deep-tech solutions, particularly in areas aligned with Sustainable Development Goals (SDGs), where complex solutions are needed to address pressing global challenges.
