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Indian start-ups raise record amount in 2021

Indian start-ups raise record amount in 2021

Start-up companies in India raised a record $24.1 billion in 2021, a two-fold increase over pre-Covid levels, according to a new study by NASSCOM and Zinnov.

According to the study, ‘Indian Tech Start-up Ecosystem: Year of The Titans’, more than 2,250 start-ups were formed in 2021, 600 more than in the previous year.

The study said “there was a threefold increase in the number of high value deals (worth over $100 million), demonstrating investor confidence with a pool of active angel investors of 2,400+ and a readiness to take significant risks”.

It added that while the United States remained the main source of foreign direct investment in start-ups, investment was coming from around the world. And about 50% of the deals had at least one India-domiciled investor.

The study added that the start-up sector saw a twofold gain in total valuation from 2020 to 2021, worth an estimated $320-$330 billion, demonstrating the sector’s development and recovery throughout the pandemic.

“In the past decade, the ecosystem has played a key role in growing direct and indirect jobs,” it said. The industries that saw the most net job creation were banking, financial services and insurance; ed-tech; retail and retail tech; food-tech; supply chain management; and logistics and mobility.

Pari Natarajan, CEO of Zinnov, said that when compared to the UK, the US, Israel and China, 2021 had “been an outstanding year for the Indian start-up ecosystem, with the highest growth rate in terms of deals, both in seed stage and late-stage funding, and the number of start-ups”.

Natarajan added that Indian firms have done an outstanding job of selling to global markets, notably through global small and medium enterprises.

 

Start-ups ‘can play a key role’

Commerce and Industry Minister Piyush Goyal said start-ups can play a key role to democratise the availability of healthcare across the globe at a time when the world is grappling with the coronavirus pandemic.

He also said that entrepreneurs should also focus on strengthening the Make in India programme, innovating in India and mentoring young start-ups.

Make in India is a national programme set up by the Indian government to facilitate investment, foster innovation, enhance skills development, protect intellectual property and build manufacturing infrastructure in the country.

Addressing the inaugural session of the Startup India Innovation Week, Goyal added: “As the world is facing successive waves of this pandemic, our entrepreneurs must start thinking of making our start-ups more resilient... I think our start-ups can play a very important role to socialise and democratise the availability of healthcare across the world.”

He added: “I suggest five mantras for growth of start-ups in the years to come – share, explore, nurture, serve and empower (SENSE).”

He said the government has taken several steps to encourage start-ups, including reducing patent filing fees, relaxing the public procurement rules and introducing seed funding schemes.