Despite funding winter, $8.4 bn poured into Indian startups in 2023

India has solidified its position as a "major global centre" for innovation and entrepreneurship, with a major rise in the number of tech companies in India to 1,22,000 to date, seeing over 16,000 new additions in 2020, according to the latest report by data intelligence platform Tracxn.

Showing resilience amid market uncertainties, the funding scenario, the total funding worth $8.4 billion poured into India in 2023, both from Indian and global investors, the Tracxn data shows. It talks about India's "decade of growth in tech startups", saying the country has seen an "unprecedented surge" in the creation and funding of startups.

The years 2020 and 2021 have been marked as a period when India saw a "monumental shift" in the funding landscape, with these two years seeing the highest investment. It says despite the recent funding winter, the number of investors has increased from 2,450 in 2014 to 16,300 in 2021.

"Over the past ten years, India's startup sector has grown a lot, becoming a global hub for new ideas and economic growth. Entrepreneurs have shown great determination and creativity, contributing significantly to the country's economic development," says Neha Singh, co-founder, Tracxn.

Among key factors behind the major growth of the Indian startup ecosystem, the report attributes are a tech-savvy young population, expansion of the middle class, and a favourable regulatory landscape for the success of India's startup story.

The top-funded sectors as per the report, from 2014 to 2023, include retail, enterprise applications, fintech, transportation & logistics tech, food and agriculture tech, auto tech, travel and hospitality tech, and ed-tech. It attributes factors like increased internet penetration, digitisation, and government initiatives to fuelling the growth.

In driving research and development, the report finds out India’s investment in deep tech has been increasing steadily over the years, with total funding of $6.73 billion, and in a decade, it received $6.23 billion.

Among the new emerging sectors, deep tech, space tech, AI, and EVs have broadened the startup landscape, the report says, adding that deep tech received funding worth $2.1 billion in 2022 alone; the EV industry received $4.8 billion in funding in the past decade; and the space tech's funding landscape grew by $114.9 million in 2022 and $122.2 million in 2023.

In terms of job creation, around 10 lakh jobs have been generated by startups till 2023, says the report, citing the Economic Survey 2023. Bengaluru remains the startup hub, with a total funding of $70.4 billion in a decade, followed by Delhi-NCR and Mumbai.

As of now, a total of 111 unicorns have been created in India, with 355 promising ones poised to join the ranks soon. "Similarly, the rise of Soonicorns began in 2019, and the year 2022 witnessed an unprecedented surge with the creation of 96 Soonicorns. Additionally, the Minicorn trend, which also boomed in 2019, experienced substantial growth, reaching its pinnacle in 2022 with the emergence of 264 Minicorns," the report adds.

The startup ecosystem has also led to significant growth in women-led startups, too, with total funding reaching $1.1 billion in 2023 from $0.456 billion in 2014. In its outlook, the report says India's economic growth is intricately tied to the success of its startup ecosystem.