Indian start-ups' valuation grows 2x to $330 billion in 2021: NASSCOM

2021 which proved to be a breakthrough year for Indian start-up ecosystem has also created a huge wealth creation opportunity. A report by the apex industry body, NASSCOM, conducted in coordination with research firm Zinnov, stated that the start-up ecosystem saw a 2X gain in cumulative valuation from 2020 to 2021, with an estimate of $320 - $330 billion, demonstrating the sector's development and recovery throughout the pandemic.

 

The 65,000 start-ups have been able to create 6.6 lakh jobs In the last decade, the ecosystem has played a key role in growing direct and indirect job opportunities, providing 6.6 lakh direct jobs and more than 34.1 lakh indirect jobs. The industries that saw the most net new job creation were BFSI, EdTech, Retail and Retail Tech, FoodTech, SCM & Logistics and Mobility. On the back of Internet commerce, freelancers, and service industries, indirect jobs have also recovered, as per the report.

 

The study titled “Indian Tech Start-up Ecosystem: Year of The Titans” took into cognizance only those start-ups which have existed for 10 years. It said that these start-ups raised a record $24.1 billion in 2021, a two-fold increase over pre-Covid levels. In comparison to 2020, there was a 3X increase in number of high value deals (deals > $100 million), demonstrating investor confidence, with a pool of active angel investors of 2400+, and a readiness to take significant risks. While the United States remains the leading source of foreign direct investment in start-ups, worldwide involvement is also growing. 50 per cent of the deals had at least one India-domiciled investor.

 

"The performance of the Indian start-up ecosystem in 2021 has proved the resilience and dedication being put by multiple startups across segments. The ecosystem has grown immensely and positioned itself as a vital contributor to the growth of India's digital economy. 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,” Debjani Ghosh, President, NASSCOM, said.

 

A flurry of unicorns

2021 churned out unicorns like no other year. The year saw the emergence of 42 unicorns across 18 sectors, third highest after USA and China, with a cumulative valuation of newly added unicorns standing at around $90 billion. Pipeline of potential unicorns expanded dramatically through 2021 reaching 135, and 6x increase in global unicorns, as compared to 2015.

High-value start-ups emerged quicker than ever this year in micro-verticals like fintech and edtech. In terms of maturity and investments, BFSI, retail and retail tech, enterprise tech, and edtech have reigned supreme. BFSI witnessed a breakout year, accounts for 13 unicorn additions and 35+ potential unicorns, along with 25 per cent of investments in 2021. Agritech, automotive, social platforms, industrial and manufacturing also witnessed significant up-tick, as per the report.

Big corporates bullish on start-ups

 

In 2021, more than 260 corporates actively participated in Indian start-ups, from 170+ in 2020, thereby leveraging multiple collaboration models and approaches.

 

“175+ unique corporates invested in start-ups in 2021; with 52 per cent being global MNCs. With each passing year, more corporates are building structured open innovation programs and 2021 witnessed 80+ unique open innovation programs; with 62 per cent hosted by global MNCs with R&D centers in India. Corporate continue to register success stories via structured collaboration programs, Co-Innovation, Joint Go-To-Market strategies, Platform Evangelization and License / Vendor agreement,” the Nasscom-Zinnov report noted.

 

“In the UK, US, Israel, and China, 2021 has been an outstanding year for the Indian startup ecosystem, with the highest growth rate in terms of deals, both in seed stage and late-stage funding, and number of startups. Indian firms have done an outstanding job of selling into global markets, notably in categories such as global SME and developer ecosystem. The fact that Indian startups are digitally native serves as an excellent model for digital native enterprises throughout the world. I believe that Indian start-up ecosystem is just getting started. It's Day Zero and we are super excited about the potential of the startup ecosystem over the next decade, onwards and upwards,” Pari Natarajan stated.

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