India to have 200 unicorns by 2025: Nasscom-Zinnov

The Indian startup ecosystem will account for 37,000 tech startups, with 180-200 unicorns with a cumulative valuation of US$ 600-700 billion

January 31, 2022

The startup ecosystem doubled in cumulative valuation by approximately US$ 320-330 billion from 2020 to 2021

Rising investor confidence, usage of deep-tech, and utilizing unexplored talent pool has resulted in the Indian tech startup ecosystem witnessing steady growth

India added 42 unicorns in 2021 across 18 sectors with an aggregate valuation of newly added unicorns standing at approximately US$ 90 billion

Delhi-NCR, Bangalore, Chennai, Pune, Hyderabad, and Mumbai account for 71% of all startups

More than 2,250 startups were added in 2021 – an increase of over 600 compared to 2020 – raising a cumulative amount of US$ 24.1 billion in 2021, which is an almost two-fold increase over pre-pandemic levels, as per a report by Nasscom and Zinnov. The startup ecosystem also doubled in cumulative valuation from 2020 to 2021 amounted to approximately US$ 320-330 billion, establishing the sector’s development and recovery throughout the pandemic. In addition, at least one-woman founder/co-founder is present in 12-15% of start-ups and 10 unicorns, per the report.

The report titled Indian Tech Start-up Ecosystem: Year of The Titans claims that rising investor confidence, usage of deep-tech, and utilizing unexplored talent pool has resulted in the Indian tech startup ecosystem witnessing steady growth. Compared to 2020, there has been a three-fold increase in the number of deals worth more than US$ 100 million, indicating investor confidence with a stable of more than 2,400 active angel investors and a willingness to take significant risks.

Despite the US continuing as the leading source of foreign direct investment in startups, global involvement has also increased with about 50% of the deals having at least one India-domiciled investor. More than US$ 6 billion has been raised via public markets with 11 startup IPOs in 2021.

Startups leading the way for job creation

Over the past decade, the startup ecosystem has been key in providing direct and indirect job opportunities, accounting for 6.6 lakh direct jobs and more than 34.1 lakh indirect jobs. Industries such as banking, financial services, and insurance (BFSI), edtech, retail and retail tech, foodtech, supply chain management, logistics, and mobility saw the most net new job creation. Freelancers, service industries, and the indirect job sector have also recovered by leveraging the burgeoning E-commerce space.

Providing the right skill sets and knowledge, investments, talent availability, and ecosystem support is resulting in entrepreneurs developing solutions with a focus on core requirements, localisation, and the promise of providing equality. Established startup hubs like Delhi-NCR, Bangalore, Chennai, Pune, Hyderabad, and Mumbai account for 71% of all startups. Apart from that developing centres like Jaipur, Kochi, Kolkata, Chandigarh, and others accounted for 29% of all startups.  As per Nasscom’s revised 2025 prediction, the Indian startup ecosystem is expected to account for 37,000 tech startups, with 180-200 unicorns with a cumulative valuation of $600-700 billion.

India’s booming startup ecosystem

India added a record 42 unicorns in 2021 across 18 sectors – the third-highest after the US and China – with an aggregate valuation of newly added unicorns standing at approximately US$ 90 billion. The number of potential unicorns is at around 135, which is a six-times increase in global unicorns with Indian technology centre as compared to 2015. The past year also saw increased participation from the corporate sector, as 260 corporates participated in the startup ecosystem and almost 175 made significant investments.

However, India must focus on encouraging tech startups to innovate for India, retain the best digital talent in the country, establish procurement reforms that help startups scale, create avenues for attracting foreign investments into Indian start-ups, and increase presence in global thought leadership.

Compared to the UK, US, Israel, and China, 2021 has been a remarkable year for the Indian startup ecosystem, with the highest growth rate in both seed-stage and late-stage funding. With an increased number of unicorns and the creation of near-term jobs, the Indian startup ecosystem’s future looks brighter going into 2022.