Global economic headwinds are strong, but the Great Indian Startup Story will go on
75,000 start-ups. India has reasons to bask in the glory of this number as the country celebrates its 75th year of Independence. An impressive performance indeed.
And a milestone for the start-up ecosystem that has been growing steadily in the past couple of years. As you know, the year 2021 witnessed a record-breaking investment of over 36 billion dollars in Indian start-ups alone. A total of 42 Unicorns took birth here in a single year, and there were 59,000 start-ups spread across 634 districts. That was the scene last year, according to the data available with the Department of Promotion of Industry and Internal Trade. This scenario and the surge in the number of Unicorns definitely boosted the country’s global rankings too.
The number has risen to 75,000, but the upswing of 2021 might not keep on happening on the same pace. Currently, India is the third largest start-up ecosystem in the world. From 2015- 2022 till date, the total funding of start-ups saw 15 times increase while there was nine times hike in the number of investors, and incubators’ tally went up by seven times.
Still, let us face the reality. The global economic headwinds are strong. They have the industry analysts warning about a “long bitter winter” ahead for start-ups.
Compared to last year, there could be correction in the high valuation of start-ups. The fund flow, as we have already seen, is not what it was before mainly because of the uncertainty in global markets. For the first time this year, funds for these ventures fell below $1 Billion in July. The decrease was 78 percent, from what it was in July, 2021.
Though this funding crunch is witnessed across all segments, the worst-hit is the edtech segment as offline learning is back in full swing. The??State of Indian Startup Ecosystem Report 2022, done by Inc42, states that “edtech is set to be the worst impacted startup segment by the funding slowdown in FY23.” India now has a total of 393 edtech startups, and together this segment had brought in funding worth $9.8 Bn from 2014 till now.
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With the change in the winds, even the companies that received good funding need to tighten their belts and revise strategies to tide over the crisis period. Business models will need to be re-analysed, and these ventures should focus on their core area and adopt a lean format for their operations.
And they don’t have to lose hope too.
Because, according to the recently released Hurun Global Gazelle Index 2022 half-year report,” 44 startups in India are going to turn into Unicorns within three years.” The picture was quite positive in the Hurun India Future Unicorn Index 2022 released by Hurun Research Institute in June this year too. It said that the country would have 122 new unicorns in the next two to four years, clearly indicating a revival of the scene once the slowdown wind passes on.
So, will this situation change in the coming months? Industry experts believe so. The Great Indian Start-up Story is still the favourite for global investors.