India is now a home to nearly 27,000 active tech startups

Image for representational purpose only. Photo courtesy: istock

India continues to be the third largest tech startup ecosystem globally (after the US and China).

The country also added the second-highest number of unicorns in the world, with over 23 added in CY2022.

Simultaneously, the potential pipeline of unicorns expanded to over 170, growing at a pace equivalent to 2021, according to the report by the National Association of Software and Services Companies (Nasscom), in collaboration with Zinnov.

"Despite the current downturns, opportunities abound for innovative companies that are leveraging emerging technologies to create actionable impact while prioritising business fundamentals over growth," said Debjani Ghosh, President, Nasscom.

Despite the headwinds, while total funding in CY2022 dropped 24 per cent over 2021, the annual investments at $18.2 billion were higher than the pre-pandemic levels of $13.1 billion in 2019.

The year also witnessed a significant investment focus on non-unicorns and unique startups.

Almost 1,400 unique startups received funding in 2022, 18 per cent higher than in 2021. Among these, 47 per cent of startups raised their first round in 2022, the report mentioned.

Both early-stage ($5.9 billion in CY2022) and seed-stage ($1.2 billion) investments grew between 25-35 per cent over 2021.

In 2022, tech startups in the seed-stage secured 1,018 investments.

Late-stage investments bore the brunt with a decline of 41 per cent in deal sizes greater than $100 million, due to considerable correction in the global public markets.

"What is remarkable is the ecosystem's maturity, where founders are intentionally prioritising profitability over valuation and the investor trust, despite macroeconomic variables at play. This will pave the way for growth in 2023 and beyond," said Pari Natarajan, CEO, Zinnov.

Tech startups are expected to continue increasing innovation and deep-tech adoption, particularly in areas related to SDGs (Sustainable Development Goals) that require complex solutions, the report said.

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