India is witnessing rapid strides towards digitization across sectors, helping Indian tech startups to gradually walk the road to recovery. NASSCOM today launched the findings of the Start-up Pulse Survey II titled ‘INDIAN TECH START-UPS – On the Road to Recovery’. The recent survey is based on observing the changes of the first tech startup pulse survey NASSCOM conducted back in April-May 2020. It was conducted to understand the then perspectives, what changed and what the next six months look like for the tech startup ecosystem in the country.

The survey reveals that the revenue acceleration and funding has improved the cash availability with startups, with 43 percent of tech startups having a runway for more than six months, compared to eight percent in the earlier survey.

Indeed companies were walking the digitization path, but gradually. But the pandemic pushed the need for digitization adoption and tech startups can leverage this opportunity with enterprise and SMB clients for product adoption. Greater focus on the shift to online has also created new business opportunities, which is also attracting interests from VCs and funding agencies to invest in seed-early stage startups. Even government initiatives such as Aatmanirbhar Bharat, Digital India, greater focus on sustainable business models are catching VCs interests. Almost 25 percent of the surveyed startups have been able to raise funds or find perspective investors as compared to seven percent in the earlier survey. Sectors like edtech, healthcare, SaaS, and SMB continue to attract investors.

Sharing her thoughts, Debjani Ghosh, President, NASSCOM, said, “The Indian start-up ecosystem has set a global benchmark in remained resilient during this disruptive year. Setting an example for many other industries across the globe to follow and learn from how Indian start-ups converted challenges into opportunities. A Large tech start-ups pool, strong innovation focus and entrepreneur’s zeal have been the growth drivers of this ecosystem. We are pleased with the way the ecosystem has been supportive of each other during these difficult times and hope that the industry remains its robust zeal to further contribute to reviving the economy.”

However, going digital has its own set of challenges. While the ecosystem continues to be cautious, it is increasingly looking at hiring talent with the right competencies. The survey reveals that hiring freeze at tech startups dropped by 20 percent. Jobs with the right skills continue to witness rising demand; these include digital skills like data, AI, product management, cloud architects.
Nearly 72 percent tech startups are enhancing their product offerings and investing in deep tech solutions that enable automation and analytics for their clients. While 60-70 percent of tech startups are relooking at their business models with focus on expanding to newer verticals, building partnerships and enhancing existing solutions. Also 40 percent of deep-tech focused startups built AI-based solutions, over 60 percent agritech and health-tech startups are focused on AI-based solutions. Though the investors sentiment look positive, reaching pre-COVID funding levels may take longer, but almost 50 percent of tech startups expect to reach re-COVID revenue levels in the next six months.

However, achieving this requires continued support from the ecosystem. NASSCOM calls out five key imperatives for startups to sustain growth momentum. This includes optimize operational metrics, expand or pivot towards growing or upcoming verticals, vocal for local products and solutions and creating a larger social & economic impact, fostering trust-based partnerships with ecosystem players and customers, and enable and encourage digitization of impacted areas.