Nasscom: Over 50% tech startups see revenue reaching pre-Covid level in 6 months, cash in hand improves

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November 25, 2020 5:24 PM

Sectors particularly edtech, healthtech, software-as-a-service, and small businesses continue to attract investors' interest as Covid opened up opportunities to serve more customers who couldn’t move out due to the lockdown restrictions.

The funds raised will be used for further scaling up production of Bandicoot and to develop new products and R&D to leverage the technology for the health care segment.Indian industry should also reflect on creating a fund with an initial corpus of Rs 10,000 crore (for investments in startups), Goyal said.

India’s technology startups’ outlook towards post-pandemic recovery has improved in the past four-five months. More than 53 per cent of technology startups in India are now expecting their revenue to reach the pre-Covid level in less than six months, according to the second Startup Pulse Survey by Nasscom released on Wednesday. The trade body for the technology industry – Nasscom had released the first Startup Pulse survey back in May, to gauge the impact of Covid on technology startups, that noted decline in revenues being faced by 90 per cent of the startups. “The Indian start-up ecosystem has set a global benchmark in remaining resilient during this disruptive year,” said Debjani Ghosh, President, Nasscom on the survey results.

The survey also said that the funding has improved the cash availability with startups as 43 per cent, up from 8 per cent in the previous survey, now have a runway of over six months to operate. Likewise, nearly 25 per cent of respondents have been able to secure capital or find prospective investors vis-à-vis 7 per cent in the first edition of the survey. Sectors particularly edtech, healthtech, software-as-a-service, and small businesses continue to attract investors’ interest as Covid opened up opportunities for businesses in these segments to serve more customers who couldn’t move out due to the lockdown restrictions.

Importantly, startup funding saw a 338 per cent jump in Q2 2020 from the year-ago period followed by a 201 per cent increase in Q3 in comparison to Q3 2019, according to the data from research firm Tracxn. The July-September quarter witnessed $14.90 billion invested across 316 rounds up from $4.94 billion in 447 rounds in the same quarter last year.

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The recovery was also visible on the jobs side as the hiring freeze dropped by 20 per cent among respondents even as digital skills such as data, AI, product management, cloud architects have remained in high demand across technology startups. This assumed significance as 72 per cent of the respondents is investing in deep tech solutions to enable automation and analytics for their customers or clients. In fact, around 60-70 per cent of startups are even expanding to newer verticals, building partnerships, and enhancing existing solutions to remain relevant in the coming time.

Nasscom urged startups to optimize operational metrics, expand or pivot towards growing or upcoming verticals; being ‘vocal for local’ for products and solutions, fostering trust-based partnerships with ecosystem players and customers, and encouraging digitization of impacted areas such as local stores and supply chain cogs to speed up growth ahead.

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