According to a new study by NASSCOM and Zinnov, start-ups skyrocketed to a record $24.1 billion (approximately Rs 1.7 lakh crore) in 2021. This is double the increase over the pre-pandemic level. The two organisations recorded the studies as a part of the ‘Indian Tech Start-Up Ecosystem: Year of the Titans’ report. The study indicated that more than 2,250 start-ups were indexed in the list in 2021, over 600 more than the previous year.
The amount raised by the start-ups in 2021 collated to a two-fold increase with a total base of 25,000 to 26,000 start-ups in India. According to the reports, the United States retained by being the biggest source of foreign direct investment (FDI) in start-ups. It also added that the involvement of the rest of the other countries is also expanding.
The study said,
“Start-ups raised USD 24.1 billion in 2021, a two-fold increase over pre-Covid levels. In comparison to 2020, there was a 3X increase in the number of high-value deals (deals > USD 100 million), demonstrating investor confidence with a pool of active angel investors of 2,400+ and a readiness to take significant risks.”
With growing worldwide involvement, about 50% of deals in FDI have at least one India-domiciled investor. The study added that in 2021, India registered 42 new unicorns, i.e. are start-ups valued at a minimum of one billion dollars. The recorded number is up by four times from the previous year. Hence, the number of unicorns added by India was the third-highest in the world followed by the United States.
The combined study showed that more than $6 billion has been derived from the public markets with 11 start-up Initial Public Offerings (IPOs) in 2021. The startup ecosystem saw a double gain in compiled valuation from the year 2020 to 2021. The report added,
“In the last decade, the ecosystem has played a key role in growing direct and indirect jobs, providing 6.6 lakh direct jobs and more than 34.1 lakh indirect jobs.”
The estimated valuation in the one-year strata makes up to $320-$330 billion corroborating the sector’s recovery and progress throughout the recurring pandemic waves. Almost 35% of investment in start-ups has been dedicated to retail and retail technology, food technology, education technology, supply chain management, and logistics. These industries also witnessed an escalation in employment creation.
Internet commerce, freelancers and service industries along with indirect jobs have seen a slope in recovery as per the study. Debjani Ghosh, president of NASSCOM said, “
The performance of the Indian startup ecosystem in 2021 has proved the resilience and dedication being put by multiple startups across segments. With record-breaking funding, an increase in the number of unicorns, jobs being created in the near term, the Indian startup ecosystem’s future looks even brighter going ahead in 2022.”
Pari Natrajan, CEO of Zinnov, said that 2021 has proved to be an outstanding year for Indian start-ups in contrast with the United States, Israel and China. He also said,
“India had the highest rate of growth with respect to deals, in both seed-stage and late-stage funding. Indian firms have done an outstanding job of selling to global markets, notably in categories such as global SME (small and medium enterprises) and developer ecosystem.”