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Deep-tech companies account for over 12 per cent of India's start-up ecosystem: NASSCOM

These start-ups raised $2.7 billion in venture capital across 319 deals in 2021, clocking a 1.6X growth over the year before

Deep-tech companies account for over 12 per cent of India's start-up ecosystem: NASSCOM
POSTED ON September 01, 2022 9:05 PM

India's deep-tech start-up ecosystem is home to over 3,000 companies and has been growing at a 53 per cent CAGR over the last decade. Over one-third of these comprise those offering solutions for enterprise tech and BFSI. The National Association of Software and Service Companies (NASSCOM) revealed this in a report released in partnership with Zinnov.

"The Indian deep-tech ecosystem today has truly come of age. These start-ups have not only defied the odds with extraordinary innovation and exceptional leadership but are also playing a vital role in creating solutions for sustainability goals – from smart manufacturing to reliable healthcare," said Debjani Ghosh, President, NASSCOM, said in a statement.

When it comes to deep-tech, these entities are focused on artificial intelligence (AI), Big Data and analytics, the Internet of Things (IoT) and blockchain. Of these, 50 per cent of AI start-ups are building solutions on interface layers, with computer vision dominating the AI application usage. 

Half of the Big Data stack building solutions revolve around business intelligence, predictive analytics and data science, while IoT platform and network layer account for over 50 per cent of solutions, with home automation products and energy management platforms being the top use cases. Blockchain is dominated by service layer and solutions across value chain tracking, smart contracts and digital identity.

According to the industry body, India has over 1,900 AI, 570 Big Data and Analytics, 560 IoT, 240 blockchains, 150 Web3 and 210 augmented reality (AR) and virtual reality (VR) start-ups. Moreover, there are over 50 start-ups each in cybersecurity, robotics, drones and 3D printing.

Overall, the share of deep-tech start-ups in India's overall entrepreneurial ecosystem stands at 12 per cent. India's IT hub, Bengaluru, accounts for 25 to 30 per cent of India's deep-tech start-ups. The Delhi-NCR follows suit with 15 to 20 per cent, with Mumbai having another 10 to 12 per cent. 

"Deep-tech start-ups have the potential to significantly drive our $5-trillion economy dreams ahead by creating a massive impact across all levels of the India story," said Pari Natarajan, CEO of Zinnov.

Deeptech Nasscom
Source: Nasscom

Battling The Funding Winter 

According to NASSCOM, India's deep-tech ecosystem is at par with that of developed nations like the US, China, Israel and Europe. Most importantly, they enable employment opportunities while also giving rise to second-generation entrepreneurs. NASSCOM noted that over 4,000 people are employed across 14 potential deep-tech unicorns. This headcount is expected to double by 2026.

The pandemic notwithstanding, 210 of these start-ups were launched in 2021, highlighting the sector's opportunities. The report stated that one in three deep-tech start-ups have applied for patents, while 23 per cent of the funded companies cater directly to consumers. 

These start-ups raised $2.7 billion in venture capital across 319 deals in 2021, clocking a 1.6X growth over the year before. Of the 30+ M&A deals in 2021, 17 per cent pertained to deep-tech start-ups, according to NASSCOM's findings. Supply chain management and logistics, health tech and BFSI jointly accounted for 52 per cent of the total capital raised in the year. 

However, all is not rosy for this sector, which has around 500 inventive deep-tech start-ups. 60 per cent of the founders battle with issues like lack of good talent, access to seed capital and market opportunities, according to NASSCOM. The other challenges include the high costs of customer acquisition and engagement with academia.

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