With digital adoption increasing, over 50 percent of startups surveyed expect revenues to hit pre-COVID-19 levels within six months, according to a recent report.
The NASSCOM Startup pulse survey II, Indian Tech Startups – On the Road to Recovery, surveyed over 270 tech startups across different sectors and maturity levels. NASSCOM is the trade organisation for IT/ITeS industry in the country.
According to the report, the pandemic has accelerated digital adoption, which tech startups can leverage. Startups are tapping into the opportunity by shifting their priorities to tackle the impact of the pandemic and cater to the growing need.
For instance, many startups diversified their product portfolio and changed their business model to tackle COVID-19. Cost optimisation will continue to a key priority at least in short-term, the report said.
There have been long-term strategic changes too. Tech startups are now expanding to newer verticals and investing in deep tech to develop AI-based solutions.
The report revealed that close to 27 percent of the startups pivoted to new verticals such as edtech, healthtech and fintech.
Hiring has returned too. The report revealed that close to 20 percent of the startups ended hiring freeze. Between April and September, direct jobs added by the tech startups were around 10,000, the report said.
The funding environment has improved as well. “There has been an increased interest from VCs and funding agencies to invest in seed-early stage start-ups. Government initiatives such as Atmanirbhar Bharat, digitalisation of India, a greater focus on sustainable business models is attracting VC interest for Indian tech start-ups ,” according to the NASSCOM statement.
For H1 FY21, startups have raised funds of about $1.7 billion with a considerable uptick in the last three months. However 48 percent of seed-stage startups and 60 percent of B2C startups are struggling to raise funds, the report said.
Close to 44 percent of B2C startups, the report said, would face cashflow crunch due to low customer demand and delay in account receivables.