Facing funding winter, Indian tech start-ups gearing up for the tough times ahead in 2024

livemint.com:

start-ups had a relatively tougher time in the past year, yet over 950 tech start-ups saw the light of the day, taking the total tally to a whopping 31,000 in the past 10 years. Since 2019, tech start-ups in India have managed to raise $70 billion in funding, revealed Zinnov-Nasscom 2023 report on tech start-ups landscape. The report states that Indian start-ups are successfully transforming challenges into opportunities, thus creating jobs and facilitating growth.

As a result, a number of tier-II and tier-III cities have come up as innovation hubs. With 40 percent of all tech start-ups in 2023 originating from emerging hubs, the ecosystem is ripe for disruptions from tier-II and tier-III locations. As a result of global slowdown, Indian tech start-ups witnessed substantial dips in funding as well as deal volumes in 2023.

Although the funding value drop was holistic across all start-up stages, late-stage investments bore the brunt with a 71 percent drop. In fact, the funding winter is likely to continue in 2024 as well. Around 82 percent of start-ups stated that longer sales cycles were affecting their growth, the report shows.

Despite the difficulties faced by the start-ups during the funding winter, tech start-ups increased their focus on business fundamentals with nearly 60 percent of founders reporting an increase in revenue and profitability in 2023. The growing focus of start-ups on deep-tech is a trend worth noticing. In fact, 25 percent of the tech start-ups founded in 2023 leveraged deep tech vis-a-vis 12 percent in the past 2 years.