Indian tech startup founders are expressing optimism about the funding environment in 2024, according to a recent survey conducted by technology industry association Nasscom and consulting firm Zinnov. The survey, encompassing responses from over 100 startup founders, provides valuable insights into the expectations and challenges faced by the Indian tech startup ecosystem.
Funding Outlook in 2024: A Ray of Hope
Despite the prevailing uncertainties on a global scale, 46 per cent of Indian tech startup founders anticipate a better funding environment in 2024. This positive sentiment is a testament to the resilience and adaptability ingrained in the Indian startup ecosystem. However, the survey also reveals a diverse range of perspectives, with 31 per cent expecting no change in the funding scenario from 2023, while 23 per cent hold a more pessimistic view.
Reflection of Global Trends: Funding Challenges in 2023
The survey findings mirror the challenges faced globally, with Indian tech startups experiencing a significant drop in funding value in 2023. The total funding reached around $6 billion, marking a 67 per cent decline from the preceding year. Deal volumes also witnessed a notable decrease, plummeting to 824, down by 48 per cent over 2022. Late-stage investments bore the brunt of this funding downturn, experiencing a substantial 71 per cent drop.
Tech Startups and Business Fundamentals: A Focus on Profitability
Amid the challenging funding landscape in 2023, Indian tech startups strategically shifted their focus towards strengthening business fundamentals. Approximately 41 per cent of the surveyed startups highlighted a significant improvement in profitability. Notably, this improvement was predominantly observed in unfunded startups, with 70 per cent of founders in this category reporting positive changes. In contrast, only 25 per cent of funded startup founders reported similar improvements.
Prospects for 2024: Strengthening Business Fundamentals and Revenue Growth
Looking ahead, the report indicates a growing emphasis on business fundamentals in 2024. Over 60 per cent of tech startup founders express their anticipation to increase revenues during the year. This strategic shift underscores the resilience and adaptability of Indian startups as they navigate through challenges and uncertainties.
Deeptech’s Rising Prominence: A Catalyst for Growth
Deep technology, encompassing IoT, big data, blockchain, AI, and other new-age technologies, is gaining prominence within the Indian tech startup ecosystem. The survey highlights that deeptech contributed around 14 per cent to cumulative funding over the last five years. Since 2019, $9.6 billion has been raised in deeptech funding, showcasing the growing significance of advanced technologies in shaping the future of Indian startups. The report predicts that investments in deeptech are likely to continue in 2024, with over two-thirds of startups planning to invest in AI to enhance product capabilities and internal efficiencies.
Global Recognition: India’s Tech Startup Ecosystem in 2023
Despite the funding challenges faced in 2023, India secured the third position globally, following the US and the UK. This recognition is based on the evaluation of enabling ecosystem strength and tech startup performance. India’s impressive growth rates, scalability to late stages, and the ability to achieve unicorn valuations contributed to its strong standing in the global tech startup landscape.
Conclusion: Navigating Growth Amid Uncertainties
As Indian tech startups gear up for the challenges and opportunities in 2024, the insights from Nasscom and Zinnov’s survey shed light on the resilience, adaptability, and strategic shifts within the ecosystem. While funding uncertainties persist, the focus on business fundamentals, the rise of deeptech, and global recognition position Indian startups for continued growth and innovation on the global stage. As the ecosystem navigates uncertainties, the spirit of innovation remains unwavering, driving the Indian tech startup narrative forward.