‘Over 50% tech startups expect revenue to pick up in 6 months’2 min read . Updated: 25 Nov 2020, 11:22 PM IST
Indian tech startups, which were battered by the pandemic, are on a gradual recovery path, with lower losses, improved cash runway and access to funding, according to the Nasscom’s Startup Pulse 2 survey
Indian tech startups, which were battered by the pandemic, are on a gradual recovery path, with lower losses, improved cash runway and access to funding, according to the Nasscom’s Startup Pulse 2 survey.
Nasscom considers active technology product or platform companies incepted in 2015 or later as tech startups.
The outlook for the sector is cautiously optimistic, and more than 50% startups are expecting revenues to reach pre-covid levels within six months, it said, adding that seed- and early-stage startups are recovering much faster.
While edtech, fintech and healthtech firms are witnessing a good recovery, B2B startups have seen a rise in revenues.
The industry body said revenue acceleration and funding has improved the cash availability with startups. Around 43% of tech startups have a runway for more than six months. In the April-May survey, it was at 8%, Nasscom said.
Fundraising, too, has seen an uptick over the past three months. In the July- September quarter, around $1.21 billion was raised, compared to $482 million in April-June.
Almost 25% of the surveyed companies raised funds or found prospective investors, compared to 7% in the earlier survey, with edtech, healthtech and software as a service (SaaS) firms continuing to attract investor interest.
The covid crisis has accelerated digital adoption and tech startups will be able to leverage this opportunity with enterprise and small business clients for product adoption, Nasscom said. Greater focus on online has also created new business opportunities.
There has been an increased interest from venture capitalists (VCs) and funding agencies to invest in seed- and early-stage startups.
Government initiatives, such as Atmanirbhar Bharat, digitalization, and a greater focus on sustainable business models, are attracting VCs to back Indian tech startups.
“The Indian startup ecosystem has set a global benchmark and remained resilient during this disruptive year. Setting an example for many other industries across the globe to follow and learn from how Indian startups converted challenges into opportunities. A large tech startups pool, strong focus on innovation and entrepreneurs’ zeal have been the growth drivers of this ecosystem," said Debjani Ghosh, president, Nasscom.
Around 20% more tech startups have started hiring. Jobs with digital skills, such as data, artificial intelligence, product management and cloud architects, continue to be in high demand across the ecosystem. According to the report, 10,000 direct jobs were added by tech startups in April-September. While hiring has improved across sectors, it is no surprise that sectors such as edtech are on a hiring spree.
However, covid challenges still persist and startups are adopting multiple short- and long-term strategies to tackle its impact.
About 72% tech startups are enhancing their product offerings and investing in deep-tech solutions that enable automation and analytics for their clients, while 60-70% are reconsidering their business models by expanding to newer verticals, building partnerships and enhancing existing solutions.
Covid-19 has also necessitated tactical and strategic shifts among tech startups, leading to rapid diversification and focus on deep-tech using AI and IoT-based solutions as the ‘New Normal’.