The third-largest in the world, India’s startup ecosystem has achieved tremendous growth in recent years, even amid the global COVID-19 pandemic. In fact, the past two years have been a watershed moment for emerging businesses across industries as they realigned their strategies and adapted quickly to the fast-changing scenario.
Year 2021 alone saw a record $38 billion poured into India’s startups with nearly 84 percent of founders who attempted to raise funding having a favorable experience, according to InnoVen Capital’s Startup Outlook Report 2022. This is alongside the emergence of 44 unicorns, ultimately resulting in a year of growth, progress, and evolution for the startup investment community.
Given the aforementioned numbers, 2021 was indisputably a successful year for the Indian startup ecosystem. Particularly, sectors such as fintech, edtech, SaaS, D2C, e-commerce, logistics, etc., performed exceptionally well. Now, as we step into the second month of 2022, there is widespread optimism in the ecosystem as 75 percent of founders expect the investment scenario to further become better and perhaps hit an inflection point. To better understand what the ecosystem has in store for the year, let’s delve deeper.
Emergence of creator economy
As internet proliferation continues to skyrocket, smartphone and social media usage, too, have been on the rise. By Q4 of 2021, India’s internet userbase crossed 825 million, with tier-II and tier-III cities accounting for a substantial number of users. With this growing internet usage also came the rise of the content creator landscape.
Given that consumers have developed a voracious appetite for engaging, unique, authentic, and immersive content, creators are leaving no stone unturned to deliver it to them, and digital platforms are providing ample support to nurture the creator economy.
Platforms such as Trell, ShareChat, and Roposo are providing creators with a powerful medium to reach their audience and have grown exponentially, especially since the ban of TikTok. With the market conditions seeming favorable, it’s no doubt that these digital platforms and the brands are content creators commence, if any, will be one of the main focuses for the startup investment ecosystem.
EVs: Paving road for a sustainable future
Alongside technological advancements, there has been a tectonic shift in people’s mindsets over the past few years. There is now growing awareness of climate change, and people are consciously switching to more sustainable ways of living, and one of the primary ways in which this shift manifests is the growing EV adoption. More and more consumers are now switching up their combustion engine vehicles that run on fuel like diesel and petrol for sustainable alternatives, i.e., EVs.
The last couple of years has seen an increasing number of EV startups emerging and the entire automobile sector adding EVs to their existing range of vehicles. However, there still exists a lack of robust infrastructure that will further assist in the creation of an EV-conducive environment in the country, and several startups are keen to change that. 2022 is sure to witness the startup investment community focus on nurturing EV and EV-related businesses to drive EV adoption in the country.
Adding healthcare to priority list
The pandemic underscored the significance of a robust, resilient healthcare system with healthcare systems around the world on the brink of collapsing owing to the unprecedented crisis. Over the past year, post the prolonged lockdowns, investments in healthcare and health-tech startups have soared. As of August 2021, Indian healthcare startups raised a colossal $1.3 billion across 69 deals. This number is significantly more when compared to the $316 million that startups in the sector raised in 2020. In 2022, both government and private players will look to bolster healthcare infrastructure, increase technology adoption, and create a strong healthcare system that can withstand future crises, if any. The investment community, too, will be a major part of this growth as it backs startups in the segment, allowing them to progress quickly.
Blockchain; laying groundwork for Web 3.0 companies
Accelerated innovation, growth, and adoption of Blockchain technology have provided the startup investment community an impetus to invest heavily in startups that leverage this technology. With words such as Metaverse and Crypto becoming the latest buzzwords in the ecosystem, startups are capitalizing on Blockchain's momentum in recent times. Similarly, Web 3.0 has piqued the interest of investors across the globe. Understanding that it may well be the future, investors are beginning to pour in funds and mentoring Web 3.0 startups, enabling them to grow and scale rapidly.
Mulling over New-Age education system
Education is one of the sectors that has undergone radical transformations since the onset of the pandemic. With educational institutions temporarily closing their doors, there was a large-scale, almost overnight shift to online learning. However, as the lockdown restrictions were eased, more and more schools and colleges have switched to a hybrid way of learning, a method that blends physical classroom-based learning and virtual learning, for optimum results. Given the innovative solutions and gamification that ed-tech startups have introduced, it’s highly likely that ed-tech will be one of the key areas of focus for startup investors this year.
Conclusion
The COVID-19 pandemic has shifted India Inc.’s focus from profitability to healthy growth metrics through innovative, tech-enabled methods, making companies progress quicker. This progress naturally captures investors’ attention and urges them to back promising startups. Overall, 2022 will be the next phase of growth for the Indian startup and startup investment ecosystems, laying the groundwork for a decade of innovation and evolution.
(The writer is Founder, Burgeon Law)
