While the global environment remains uncertain, 46 per cent of Indian tech startup founders expect a better funding environment in 2024, said technology industry association Nasscom and consulting firm Zinnov in their latest startup survey comprising over 100 startup founders. 31 per cent of the respondents are of the view that the funding scenario will see no change from 2023 while 23 per cent are pessimistic about the change this year.
Mirroring global trends, Indian tech startups had witnessed a substantial drop in funding value that reached a total of around $6 billion in 2023, down 67 per cent over the preceding year. Deal volumes also dropped to 824, down by 48 per cent over 2022. While this funding value drop was holistic across all start-up stages, late-stage investments bore the brunt with a 71 per cent drop.
Amid a tough year, tech startups increased focus on business fundamentals as 41 per cent highlighted a significant improvement in profitability. This was primarily driven by unfunded startups with 70 per cent of founders highlighting this improvement. However, only 25 per cent of funded startup founders reported the same.
Focus on business fundamentals in 2024 is expected to grow stronger with over 60 per cent of tech startup founders expecting to increase revenues this year, the report noted.
The use of deep technology or deeptech, comprising of IoT, big data, blockchain, AI and other new-age technologies, is becoming increasingly prominent and mainstream within the tech startup ecosystem, contributing around 14 per cent to the cumulative funding over the last five years.
Since 2019, $9.6 billion has been raised in deeptech funding and investments in deeptech are likely to continue in 2024 with over two-thirds of the startups investing in AI to enhance their product capabilities and internal efficiencies.
Overall, India secured third place in 2023, after the US and the UK, based on the evaluation of enabling ecosystem strength and tech startup performance on the back of impressive growth rates, scalability to late stages, and the ability to achieve unicorn valuations.