Startups on new-age tech surge in India

A maturing ecosystem and tailwinds on the digital front due to Covid have expanded the ‘deep technology’ component of the Indian startup ecosystem. Deep tech includes the use of emerging and new-age tech such as AI, machine learning (ML), augmented & virtual reality, blockchain, robotics and 3D printing.

At 19%, now nearly one in five tech startups are leveraging deep-tech solutions for their businesses. The pool of deep-tech ventures is expanding at a five-year compounded annual growth rate (CAGR) of 41% — faster than the overall ecosystem, a study said.

Over 2,100 startups adopted deep technologies in their ventures as of 2020, up from the over 1,600 in 2019. Further, 14% of the total startup investments in 2020 were in deep-tech ventures, higher than the 11% in 2019. Up to 87% of these investments were in AI/ML startups in 2020. The Nasscom and Zinnov study further notes that deep tech will continue to grow at a CAGR of 40-45% in 2021.

Tech startups not just stayed afloat amid uncertainties but also converted the crisis into an opportunity, the report said. It noted that ‘digital maturity’ in the ecosystem jumped to 55% in 2020 from 34% in 2018. The acceleration in digital adoption brought about by Covid has resulted in “deep tech getting deep rooted into startups’ DNA”, the report added.

Jatin Desai, managing partner at Inflexor Ventures, a deep tech-focused VC firm, says they have observed a steady growth of such startups pitching to them for investments over three-four years, and anticipates this to continue into 2021.

“Over 50% of our current portfolio companies are deeptech startups,” he said. The country’s tech startup base is estimated to be growing at a scale of 8-10% year-on-year. Nasscom defines tech startups as active tech product or platform companies incepted in the last five years.