India sees addition of 1,600 tech startups, 12 unicorns in 2020, says Nasscom

The technology startup eco-system has continued to witness a steady growth during 2020 on the back of rapid digitalisation and tech adoption in the country, a Nasscom-Zinnov report said.

During the year, over 1,600 tech start-ups and a record number of 12 additional unicorns were added, the highest ever in a single calendar year. Potential unicorn pipeline stays strong with 1.5x growth since 2019. The Indian tech start-up base is witnessing a steady growth of 8-10% year-on-year, the report said on Thursday.

"Covid-19 has accelerated digital adoption and the shift to online in the country. This has created new opportunities for tech start-ups that are capitalising on this opportunity with rapid digital acceleration and a shift to SaaS-based solutions. Deep-tech is also getting deep-rooted into start-ups' DNA with 19% of tech startups leveraging deep-tech solutions to build product competencies for market expansion," Nasscom said in its annual report titled "Indian Tech Start-up Ecosystem - On the march to trillion-dollar digital economy". The report is prepared jointly with Zinnov, a global management and strategy consulting firm.

Nasscom defines a tech start-ups ecosystem as active technology product or platform companies incepted in the last five years. This has led to a significant momentum in the deep-tech space with increased interest from venture capital firms (VCs) and funding agencies to invest in deep-tech startups. About 14% of total investments in 2020 were in deep-tech start-ups, up from 11% in 2019. Further, 87% of all deep-tech investments were in AI/ML startups in 2020.

The report revealed that despite a lower number of total start-up deals in 2020, seed-stage investments are recovering at a good pace as investor activity at lower ticket sizes has increased. Seed-stage funding in 2020 recovered to more than 90% of 2019 levels. Early and Late-stage investments are also recovering steadily.

Sectors with Covid-19 tailwinds such as EdTech, BFSI, AgriTech, Gaming, etc., are witnessing a steady increase in first time funding, up from 29% in 2019 to 42% in 2020, garnering a 14% growth in absolute numbers.

In 2020, Indian tech start-ups not only managed to stay afloat amidst uncertainties and rapid experimentations, but also strategically strengthened their playbook by converting the crisis into opportunity. As a result, Indian enterprises’ Digital Maturity has jumped to 55% in 2020 from 34% in 2018, the report added.