As India leaps forward to becoming a digitally transformed nation, the Indian Deeptech start-up ecosystem continues to witness a significant growth trajectory on the back of an exponential rise of emerging technologies and their adoption across sectors. The National Association of Software and Services Companies (NASSCOM), in partnership with Zinnov, a global management and strategy consulting firm, today launched its first in-depth Deeptech start-up report, titled, “India’s Deeptech Start-ups – Poised for Impact”.
2021 has been a landmark year for India’s Deeptech start-ups with the ecosystem witnessing 1.6X growth in equity investment, compared to 2020. With over 3000 Deeptech start-ups as of 2021, the ecosystem has grown at a staggering rate of 53% CAGR in the last 10 years, growing at par with the Indian tech start-ups. Over 210 Deeptech start-ups were added in CY2021.
The Indian Deeptech start-ups are well on their way to creating a niche for themselves in the global start-up arena. Although in its nascent stage compared to other economies such as USA, Europe, Israel and China, the Indian Deeptech ecosystem is expanding fast. The industry is witnessing more start-ups emerging to solve global mega challenges of clean tech, zero hunger, smart cities and climate actions, thus accelerating India’s path to achieving sustainable development goals across segments.
Commenting on the Deeptech ecosystem growth, Debjani Ghosh, President NASSCOM said, “The Indian Deeptech 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. The ecosystem has also fortified the country’s job creation with over 4000 people being employed across 14 potential Deeptech Unicorns and is expected to increase by 2X in headcount by 2026. Strategic partnership with Government, academia, global investors, streamlined corporate collaboration and dedicated testbed programs can create a massive impact on India’s Deeptech story.”
Deeptech is getting deep-rooted into start-ups DNA. This has led to a significant momentum in the Deeptech space with increased interest from equity investors and VCs. In 2021, over 270 unique start-ups raised $2.7 Bn across 319 deals, with AI and Big Data & Analytics being the top technologies raising equity investments. Owing to its strong fundamentals for scaled start-ups, seed stage start-ups have witnessed a 2.3X growth in equity investments in 2021, as compared to 2020, raising a total of $186 Mn funding in 2021. Amongst verticals SCM and logistics were the most funded sectors in 2021, with Deeptech start-ups raising funding across use cases like drone delivery, autonomous delivery bots, cold chain monitoring and fleet management. India’s Agri-tech sector also witnessed a boom in funding in 2021 owing to multiple early and late-stage funding. Deeptech start-ups have a presence across not just traditional business verticals, but also newer verticals such as environment tech, aviation, Maritime & Defence and Life Sciences.
An analysis of a sample set of Deeptech start-ups indicate that:
- 70%-75% of Deeptech start-ups have at least 15% of their workforce skilled in deep technologies
- Over 75% of Deeptech start-ups are building solutions for B2B enterprises’ problems as compared to only 40% of the overall tech start-ups.
- With a growing focus on customer centricity, the ecosystem has witnessed over a 3X increase in Deeptech adoption by B2C start-ups developing consumer-centric solutions.
- Sectors such as BFSI, HealthTech, EdTech, and Fitness & Wellness have driven B2C growth and account for 57% of the Deeptech start-ups incepted during 2020-2021.
Further, with a growing focus on digitization, enterprises are increasingly partnering with Deeptech start-ups to build niche tech capabilities and product portfolio expansion. Amongst the 30+ M&A deals in 2021, 17% of the total deals pertain to deeptech start-ups.
From the 3000+ Deeptech start-ups, over 500 are classified as Inventive Deeptech start-ups. These are companies that are creating products and solutions with the potential to develop new intellectual properties, backed by scientific advances and fundamental research, thus emphasizing the skilled Deeptech talent that India has to offer.
However, despite this phenomenal growth, the Deeptech start-up ecosystem faces multiple challenges. These include talent & market access, research guidance, investors’ understanding of Deeptech, customer acquisition and cost for talent. Proactive measures and the right stakeholder inventions such as access to seed capital & thematic funds, market access & PoC led engagements, enhancing technology business incubators, academic collaborations, and world-class innovation clusters are needed to further address vulnerabilities, develop select skill sets, and drive innovation for India to emerge as a global leader in the Deeptech space.
DeepTech start-ups founded between 2011-2021
Inventive DeepTech start-ups create a new product or solution which are generally backed by fundamental research and largely develop new intellectual property that involve scientific advances
