India's start-up ecosystem is recovering faster than expected as a new report on Wednesday said that investor interest is quickly getting back to pre-Covid levels while 75 per cent of start-ups are gradually, but steadily, recovering. This is despite the fact that the Covid-19 jolted the India startup ecosystem across multiple dimensions and the impact was severe during the lockdown period from March to June 2020, said the report by TiE Delhi-NCR, part of the global non-profit TiE network, and Zinnov, a global management, and strategy consulting firm.
There was a dip in overall funding by 50 per cent during the lockdown as compared to pre-COVID levels. Around 40per cent of start-ups were negatively impacted, and 15 per cent of Indian startups were forced to discontinue operations due to Covid-19, said the report. However, as the economy opened, the pace of recovery -- both in demand and in investor sentiment -- has been faster than expected.
Around 30 per cent of start-ups have pivoted to newer markets for alternative revenue streams, while more than 55 per cent of startups are focusing on profitability and reducing cash burn.
Further, deal activity -- both in terms of total investments and the number of unique funded startups -- has recovered to pre-Covid levels during the quarter that ended in September 2020, said titled, "COVID-19 and the Antifragility of Indian Startup Ecosystem".
In Q3, the Indian startup ecosystem showed positive signs of recovery --funding reverting to 98 per cent of Q1 (pre-Covid) levels, investor sentiments becoming positive, ticket sizes increasing and number of start-ups raising their first investment round also reverting to Q1 levels, showed the findings.
Interestingly, seven Indian start-ups have already reached unicorn status in 2020, with four of these during covid-19.
India is on track to have a total of eight unicorns this year -- almost the same number of additions as in 2019, said the report.
"Although COVID-19 has been a major setback for the ecosystem, we believe that the changes that the pandemic has brought on will make our ecosystem much stronger, across every dimension. India is on a path to have 100 unicorns by 2025," Rajan Anandan, President, TiE Delhi-NCR, said in a statement.
Additionally, the start-up ecosystem is expected to have 7-7.5 Lakhs direct jobs and 26-28 lakhs indirect jobs in total, by the end of 2020, further cementing its recovery.
"Despite the trying times, and the death of many startups, the ecosystem has played a key role in employment generation and is expected to create 15-16 Lakhs direct jobs by 2025," said Pari Natarajan, CEO, Zinnov.
"There is clear evidence that India's future is about technology, policy, innovation, and entrepreneurship."
