Trends that will Drive Indian Start-up Sector in 2022

Posted by Global technology interface on February 03, 2022


In retrospect, the year 2021 shall always be remembered and recalled as a landmark and path breaking year for the Indian startup ecosystem and the whole craze of these new-era businesses to shun their private labels and outlooks and go public. 2021 opened up a whole new avenue for investments not only for the start-ups but also for the public markets and the crores of retail investors.

 

Considering India is now becoming a hub of globally relevant products, Indian start-ups are now looking to go global and paving their path to touch the global markets. A recently concluded survey revealed that over 42% of start-ups are looking to expand and tap into global markets in 2022. The bumper listing of Zomato in July was a watershed moment for the Indian stock markets and the start-up ecosystem.  Not only Zomato, it was followed by the likes of NykaaPaytmPolicybazaar.  Overall, nine startups have gone public so far in 2021, raising funds to the tune of $5.86 Bn. These include $5.76 Bn in the domestic market and $100 Mn by Freshworks in its US IPO. 2021 is a pioneering year in terms of startup IPOs, 2022 would be the year when this new phenomenon of startups going public reaches new heights with a whole lot of unicorns and other online businesses lined up for the same.

 

The last two years saw a tectonic and radical shift across sectors and domains that was brought about by the pandemic and ensuing levied lockdowns. Because of the rapid achievements in the domains of deep-tech and digital innovations, our lives were not halted and these start-ups played a critical role to help us move ahead.

 

 Tech startups are expected to create a much bigger impact and ripple effect in the coming year. Innovation, collaboration, and entrepreneurship are the three key pillars that make the Indian startup ecosystem as vibrant and dynamic as it is today. Although 2022 promises to be a year to remember, the lessons learned in the last two years will become key as startups navigate through the new normal. Some of the evident trends that will be seen in the coming year are enumerated below;

 

A larger investment pool

When the pandemic forced billions of businesses to digitally modernise their operations, technology-led start-ups and their solution offerings played a critical role. Among the key technologies adopted, cloud computing proved to be the clear winner. It soon established itself as the major infrastructure for millions of individuals forced to work and learn from home. The spike in demand for cloud software has resulted in large profits, which are likely to last well into 2022.

 

. A transformed deep-tech ecosystem

A new Indian deep-tech ecosystem is fostering, propelled by investors who have invested into the field, pushed by innovation. The Indian startup ecosystem outperformed itself this year, with the startups raising up to $26 billion in the first eight months of the year. India’s vantage points are unique, with a young population and greater connectivity, the emergence of corporations going public, and startups developing deep technology solutions. Deep technology is becoming more of a necessity than a choice. It is safe to assume that India is the next deep-tech hotspot.

 

. A bigger and stronger unicorn club

India is becoming the world’s fastest-growing startup ecosystem. In a recent address by, Hon’ble Prime Minister Narendra Modi, he stated that there are over 70 unicorn startups, as of 2021. These organizations are valued at approximately $168 billion and India now has the world’s third-largest unicorn ecosystem after the United States and China. It is said that fintech, SaaS, and e-commerce will continue to grab the bulk of investments and 2022 can expect many more such startups joining the unicorn club.

 

. Collaboration between corporates and startups

Partnerships between startups and large global corporations are critical to the advancement of technological innovations and this association is important for the long-term growth of businesses of all sizes.  More B2B firms are looking to expand globally, so having access to a large scale of infrastructure and support is critical. To a considerable extent, this can be offered by big businesses, which will assist small startups in accessing their data pools. A recent report by Zinnov confirmed this, stating that the relationship between huge companies and startups will be enhanced further, owing to the latter’s need to expand their team and maximise the resources provided by corporates through accelerator programmes.

 

2022 Year Ahead, Growth in Sectors

Digital/IT sector- We have seen how digital transformation has become a major strategic focus for India’s businesses in the last year. According to projections, India’s ICT spending is expected to reach $101.8 billion in 2022, increasing by 7% from 2021. During last year, almost every area of India’s digital economy saw a multifold increase. The tech services business is predicted to grow by double digits, but the focus on client centricity, domain, and innovation is changing the way legacy services are delivered. The transition to digital transformation for businesses and governments is going accelerate.

 

Clean Tech- After a year of uncertainty, India’s renewable energy sector is set to thrive in 2022, with an estimated investment of over USD 15 billion as the government is concentrating on electric vehicles, solar equipment manufacturing, green hydrogen, and fulfilling the ambitious 175 GW renewable capacity target. India now has more than 150 GW of installed renewable energy generation capacity, with an aim of achieving 175 GW by 2022. Solar power would generate 100 GW, wind power would generate 60 GW, biopower would generate 10 GW, and minor hydropower projects would generate 5 GW, there by opening new avenues for the sector.

 

Biotech- India is among the top 12 destinations for biotechnology worldwide. The industry comprises >2,700 biotech start-ups and >2,500 biotech companies in the country. India has 665 FDA-approved plants the US; 44% of the global abbreviated new drug applications (ANDA) and >1400 manufacturing plants, which are compliant with WHO. India’s overall bioeconomy will bounce back in FY 2022, growing at a rate of 14-16 percent between FY 2022 and FY25. However, to reach the ambitious US$150 billion threshold by FY 2025, an additional push and stimulus might be required.

 

As we enter the new year, the startup environment will continue to be driven by innovation. New-age technologies will have a greater impact on society in 2022, making it a successful year for them. The startup scene in India is fueled by a desire to create cutting-edge solutions. We have a lot to look forward to, and we can expect to see the Indian business landscape transform before our eyes as a result of collaboration between companies and startups.

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