In 2020 the world has seen a shift towards digitalisation, prompted by the Corona Virus. Indian startups know how to handle tight resources and have emerged out of the crisis stronger than ever. 12 startups have reached unicorn status in 2020 joining the club of now 38 unicorns active in India. According to the newest NASSCOM report on ‘The State of the Indian Tech Startup Ecosystem in 2020’, 1600 new startups have emerged in 2020. Also, the institutional support for startups has picked up in recent years. More than 135 global corporates are collaborating with Indian startups and 520+ incubators and accelerators across 100 cities offer services to startups, a rise of 42% since 2015.

Some of the key trends the report highlights are:

  • India’s accelerating digital economy due to higher internet penetration and an increased digital maturity of Indian enterprises.
  • A shift in the founder playbook as Covid-19 has urged a change in founder mindsets towards more collaboration, employee experience, frugality and global expansion.
  • Deep-tech is growing deep-roots with 19% of all start-ups leveraging deep-tech to build more complex and smart solutions across industries.
  • Strong investor commitment that has recovered in the second half of 2020. 90% of angel investors from 2019 were active in 2020.
  • Consistent corporate participation with 135+ corporates actively investing, acquiring or partnering with startups.
  • Growth of new startup hubs beyond the established startup hubs.

Overall, Bangalore remains the biggest startup hub in the country with more than 800 funded startups, followed by Delhi-NCR with 630+ funded startups and Mumbai with 380+ funded startups. Also the sectoral distribution has become more heterogeneous in 2020 with Enterprise Tech leading the ranking with 15%, followed by HealthTech (10%), FinTech (9%), EdTech (9%), RetailTech (7%), HRTech (6%), Consumer Tech (6%) and Media and Entertainment (4%). More than 19% of Indian startups are leveraging deep-tech to build solutions which represents an overall population of 2100 startups. Artificial Intelligence with 44% remains the most popular application, followed by Internet of Thing (22%), Big Data (18%), Blockchain (8%), AR VR (7%) and 3D Printing (3%). While the Corona virus imposed lockdown significantly reduced investment deals in Q2 and Q3 of 2020 relative to 2019, the funding ecosystem is recovering fast. However, especially later-stage funding remains behind expectations. 44% of all investment in 2020 were in EdTech, FinTech and Enterprise Tech.

A key pillar of India’s growth strategy is the acceleration of its digital economy, triggered by the outbreak of Covid-19. India’s digital economy is expected to reach $500-650 billion value without special interventions. However, some traditional sectors such as travel & hospitality, automotive and manufacturing have been negatively affected and are below par-funding and are expected to face extended recovery period. The clear winners of the pandemic despite the EdTech, FindTech and Enterprise Tech sector are HealthTech, the Gaming, Media & Entertainment sector and startups offering cyber security products. Remote work has led to an increase of cyber-attacks. 70% of Indian organisation experienced more than 25% increase in cyber threats or alerts amid the shift to the ‘work-from-home’ concept. This has triggered a 1.4x growth in revenue of Indian cybersecurity product companies from 2019.

The outlook for the Indian tech entrepreneurship ecosystem is positive. India is geared to reach 50+ unicorns in 2021. Additionally, remote work has reduced geographical disadvantages and global markets have come faster than expected into the focus of Indian entrepreneurs. International startup programmes supporting global expansion of Indian startups thus are gaining significance.

However, a few key challenges hampering the development of the Indian tech entrepreneurship ecosystem remain. Seed-stage investments remain below expectations and have stagnated in the range of $400-500 million per year. Additionally, India will need to retain its vast talent and at the same time attract international talent. Especially the concept of ‘work-from-home’ offers new opportunities here. While corporate engagement in startup incubation has increased it remains abysmally low compared to other global ecosystems. Finally, India needs to continue to strengthen its enabling support ecosystem. Key infrastructure investments, accessible to all, can accelerate growth.

Disclaimer: The article is a summary of the new NASSCOM report on ‘The State of the Indian Tech Startup Ecosystem in 2020’. The full report can be accessed here: