Technology: 60% of Indian startups report increased revenue and profitability in 2023
New Delhi: The funding crunch of 2022 and 2023 may have come as a blessing in disguise for many Indian startups, as 60 percent of startup founders reported increased revenue and profitability in 2023.
Also, according to Weathering The Challenges- The Indian Tech Startup Landscape Report 2023, a study undertaken by The National Association of Software and Service Companies (Nasscom) and Zinnov, a global management consulting firm, a significant portion of unfunded tech startup founders anticipate higher revenues in 2024 compared to their funded counterparts.
This year, the technology startup founders expect to continue the revenue growth path with measured steps, focusing on optimizing expenditure and maximizing profitability for B2B tech startups.
Nasscom President Debjani Ghosh said, “India’s tech startup ecosystem has truly matured, attracting more than USD 70 billion in cumulative funding between 2019 to 2023. This growth is now anchored in a strategic shift towards improving business metrics and revenue streams.”
“DeepTech, a key innovation driver, accounts for just 14 percent of this funding and needs an exponential acceleration to build India’s DeepTech ecosystem. The proliferation of tech startups in Tier-II and III cities marks the ecosystem’s resilience,” she noted.
According to the report, India remains the third-largest tech startup ecosystem globally, with over 950 tech startups founded in 2023, contributing to a total of more than 31,000 tech startups in the last 10 years. The cumulative funding for these tech startups from 2019 to 2023 exceeded USD 70 billion.
The report also highlighted the increasing mainstreaming of deep technologies. Indian startups are leveraging deep tech to improve organizational efficiency (59 percent of the surveyed tech startups), reduce operational costs (52 percent), and automate internal operations (41 percent of the surveyed tech startups).
The democratization of technology in 2023 has led Indian technology startups to diversify into Tier-II and Tier-III locations. The share of tech startups established in emerging hubs rose to 40 percent in 2023, reaffirming the depth of India’s startup proliferation.
The report said that business model innovations in core sectors witnessed improvement in the last 12 months. These sectors included automotive, industrial, and manufacturing, which recorded stability with an increase in share of funding as compared to other sectors.
Despite reports about layoffs dominating the startup sector in 2023, over 65 percent of the over 100 startup founders surveyed have done moderate hiring in 2023.
Investments in DeepTech will continue an upward trend in 2024. With Gen AI acceleration, 70 percent of startup founders are embedding Artificial Intelligence (AI) in their solutions.
Deep tech, or deep technology, refers to those startups whose business model is based on high-tech innovation in engineering, or significant scientific advances.
“Despite funding headwinds – including valuation corrections, selective capital allocation, and regulatory changes– India’s tech startup ecosystem continues to grow at an impressive clip. DeepTech, a burgeoning sector, is gaining prominence, and Tier-II/III cities are transforming into innovation hubs, decentralizing the startup landscape.
“The India startup story is no longer about just scale and innovation but also efficiency and adaptability – all building blocks of sustainable value,” said Pari Natarajan, Chief Executive Officer at Zinnov.