India’s entrepreneurship scene continues to thrive with a growing footprint of startups despite macroeconomic concerns and a funding winter. According to the 2021-22 Economic Survey, nearly 14,000 new startups joined the ranks across 555 regions during the 2022 fiscal year.
Indian startups raised a cumulative $24 billion through 1,021 deals in calendar year 2022, according to data from the ‘Startup Perspective’ report by management consultancy PwC. Although the numbers were 33% lower than in the 2021 overfunding cycle, investment in the ecosystem was more than double what it was in 2020 and 2019.
With the increase in digital adoption and growth in the consumer internet sectors, the focus of early-stage investors has shifted to addressing business and sector issues.
“India has seen reasonable growth in consumer e-commerce and internet, which will continue to grow due to digitization and simple payment solutions, and will also provide many opportunities for other growth areas,” says Anil Joshi, Managing Partner of Unicorn India Ventures. your story.
He adds, “With the deep penetration of digitization, offering services and products across the country has made sense. We expect strong growth in the technology-driven business which will drive the aspirations of the new India.”
The focus on technology and digitization has highlighted the sunrise segments.
The climate technology sector has been on a growth curve with the adoption of green transportation and the booming electric vehicle industry. Around 172 Indian climate technology startups Fundraising in 2021, followed by $2.2 billion investment in the sector across 143 startups in 2022.
This trend will continue into the next year, with the government spurring investments in electric vehicles and allied space.
“Looking back five years ago, hardly anyone knew anything about electric cars. Now, almost everyone thinks their next car will be electric. More and more companies are increasingly focusing on sustainable alternatives – in packaging, supply chain, logistics, etc., This is bound to accelerate the adoption of green alternatives,” notes Swapna Gupta, partner at Avaana Capital.
She adds that innovation across the energy transition, decarbonization of the supply chain, the future of mobility, sustainable agriculture, and resource management are being looked at with interest.
Artificial Intelligence, Deep Technology, SaaS
Curiosity about Open AI’s ChatGPT chatbot has reignited the conversation about investments in AI. The coming year will see the use of technology to improve productivity, the adoption of software to boost efficiencies across verticals, and the use of deep technology to solve problem data in agriculture, healthcare, and other sectors.
“The sectors that the new Java Capital fund will focus on are SaaS, fintech, deep tech and climate tech,” notes Kartik Polabaka, co-founder and partner at Java Capital.
He adds, “In 2020, when we invested in EPlane, we were one of the few pre-seed/seed-stage funds to invest in deep technology. We look forward to doubling down on our expertise to identify and support founders who push boundaries and build cutting-edge solutions in areas such as battery management for vehicles.” electricity, climate finance, renewable energy, semiconductors, and carbon control.”
Shashank Randev, co-founder of 100X.VC adds that the modernization of the agricultural sector will add to the growth of startups developing AI/ML technologies.
He notes that “as more businesses and consumers embrace digital technologies, low-token/no-token startups in India are expected to grow significantly” Web3 and fintech.
Startups providing market and technology solutions saw significant investment in CY 2022 from both niche and public investors. This trend is likely to continue, says Marc Kahn, managing partner at Omnivore.
“In 2023, we expect agritech innovations in three areas to gain momentum – agricultural deep technology, agricultural life sciences (AFLS), and rural financial technology,” says Mark. your story.
He adds, “The next digitally literate billion crave affordable agritech innovations and we could see entrepreneurs responding to this demand with solutions designed for smallholders.”
according to the data Project intelligenceIndian agritech companies raised nearly $515 million through 49 deals in 2022 compared to $859 million raised in the previous year via a similar number of deals. The government’s move to build an agristack for innovative agricultural solutions will be a shot in the arm to build startups for the sector.
RBI’s guidance has helped customer-centric fintechs identify opportunities in credit and pay later (BNPL) chip purchases. Next year will see them focus on premium shows.
The sector contributed about 20% to the total funding raised by Indian start-ups in 2022, although funding activity decreased by 40% compared to 2021, according to data from PwC.
“Fintech companies will continue to see investments driven by strides in data available for lending even though large-scale SME lending and bill discounting will see consolidation,” says Anup Jain, Managing Partner at Orios Ventures.
Dinesh Pai, head of fintech incubator Rainmatter, said the fund’s focus will continue to be on fintech, climate and health. “We focus on these sectors for several reasons: growth potential, innovation and impact. Our core competency lies in financial technology, specifically, in capital markets products that help individuals better manage money. And we can add the most value to teams that enable savings and investments, for example.”
Sector or portrait use cases will continue to perform well. Omnivore’s Mark Kahn adds that providing formal financial services and solutions to farmers will be key to rural fintech
The addition of new segments to the Open Credit Enablement Network (OCEN) Open API – which brings together borrowers, Loan Service Providers (LSPs) and intermediaries – will play a key role in growing the small business lending ecosystem.
You need to be careful
While emerging new sectors of interest may build momentum, overall growth may remain muted. Startups will increase their focus on unit economics — which reduces burnout and sets a clear path to profitability, says Ashish Sharma, managing partner at InnoVen Capital.
“We don’t have a top-down objective and will evaluate every opportunity from a risk/return standpoint,” he notes, adding, “Startups will spend less on marketing and discounts, spend heavily on customer acquisition, and focus more on customer acquisition, retention, repeat purchase, and customer acquisition more efficiently.” .
Ankur Bansal, Co-Founder and Director atHe said that acquisition financing will also be a focus as the market moves toward consolidation.
While most companies are still looking to grow at a healthy rate, investors expect that 2023 will not deliver the impressive growth rates we saw in 2021 or 2022.