60% startup founders report increased revenue, profitability in 2023

The funding crunch of 2022 and 2023 seems to have done better for the Indian startup ecosystem. According to the findings of a Nasscom and Zinnov study, about 60 per cent of startup founders reported increased revenue and profitability in 2023.

Additionally, a significant portion of unfunded tech startup founders anticipate higher revenues in 2024 compared to their funded counterparts, said the report 'Weathering The Challenges- The Indian Tech Startup Landscape Report 2023'.

Navigating 2024, tech startup founders expect to continue the revenue growth path with measured steps, focusing on optimizing expenditure and maximizing profitability for B2B tech startups.

Debjani Ghosh, President of Nasscom, said, “India’s tech startup ecosystem has truly matured, attracting more than $70 billion in cumulative funding between 2019 to 2023. This growth is now anchored in a strategic shift towards improving business metrics and revenue streams.”

She further added, “DeepTech, a key innovation driver, accounts for just 14% of this funding and needs an exponential acceleration to build India’s DeepTech ecosystem. The proliferation of tech startups in Tier-II and III cities marks the ecosystem's resilience.”

The report stated that India remains the third-largest tech startup ecosystem globally, with over 950 tech startups founded in 2023, contributing to a total of more than 31,000 tech startups in the last 10 years. The cumulative funding for these tech startups from 2019 to 2023 has exceeded $70 billion.

The report also highlighted that the use of deep technologies is increasingly becoming mainstream. Indian startups are leveraging deep tech to improve organizational efficiency (59 per cent of the surveyed tech startups), reduce operational costs (52 per cent of the surveyed tech startups), and automate internal operations (41 per cent of the surveyed tech startups).

The democratization of Tech in 2023 has led Indian tech startups to diversify into Tier-II and Tier-III locations. The share of tech startups established in emerging hubs rose to 40% in 2023, reaffirming the depth of India’s startup proliferation. Business model innovations in core sectors witnessed improvement in the last 12 months; sectors such as Automotive, Industrial, and Manufacturing recorded stability with an increase in share of funding as compared to other sectors.

Despite the news on layoffs dominating the startup sector in 2023, as per the survey of over 100 startup founders, over 65% of them have done moderate hiring in 2023.

Investments in DeepTech will continue an upward trend in 2024. With Gen AI acceleration, 70% of startup founders are embedding Artificial Intelligence in their solutions.

“Despite funding headwinds – including valuation corrections, selective capital allocation, and regulatory changes- India's tech startup ecosystem continues to grow at an impressive clip. DeepTech, a burgeoning sector, is gaining prominence, and Tier-II/III cities are transforming into new innovation hubs, decentralizing the startup landscape. The India startup story is no longer about just scale and innovation but also efficiency and adaptability - all building blocks of sustainable value,” said Pari Natarajan, Chief Executive Officer at Zinnov.