Indian Startup Ecosystem – Exclusive Year End Analysis – 2020 – All You Need To Know!

The year 2020 in the Indian startup ecosystem began with over 38,000 startups flourishing rapidly. However, the outbreak of the COVID-19 pandemic jolted the entire startup ecosystem at multiple levels, especially during the lockdown period. With numerous layoffs, many businesses shutting down, and pay cuts, almost 40% of the startups in India were negatively impacted from March to June 2020.

The Two-Sided Pandemic Impact

With business disruptions due to the coronavirus outbreak, many startups witnessed a decline in their revenues; however, a few saw unprecedented growth. The prolonged lockdown accompanied by restricted movements has had consumers turning towards increasing adoption of digital-first categories such as EdTech, eCommerce, and online gaming.

The EdTech industry witnessed a boom, and pioneers ensured that top-quality education was accessible across the country. The closure of schools, colleges, and coaching centers accelerated the growth of the remote learning model. Even the investors showed a keen interest in the education industry. Byju, India’s leading startup in the EdTech industry, witnessed 6 million new students accessing their free lessons platform. Many startups in the education industry could manage to raise colossal funding- Tiger Global’s investment in Byju of $200 million followed by another $200 million from General Atlantic and $100 million from Mary Meeker’s Bond Capital is one of the biggest fundings for an EdTech startup.

A similar high has been witnessed by various e-commerce platforms. With people confined to their homes, the only option left was to order online. The trend of ordering online had already gained momentum, but this year it grew at a much faster pace. The restrictions on social gatherings led to an increase in online gaming. From household items to food, people resorted to online platforms. The food ordering aggregator, Zomato, raised funding of $250 million from Teamsek and Kora Management, Tiger Global, in August 2020.

The startups in Medtech, biotech, and health care, despite a brutal blow delivered by the pandemic on them, innovated to deliver solutions during this crisis. Companies like Bione, MyLab, Redcliffe Life Sciences, and Nocca developed COVID-19 testing kits, ventilators, and other diagnostics solutions.

However, there were a few that could not survive the pandemic tide. Over 70% of transport and travel startups reported a decline in their revenues by 40%. With a complete travel ban during the lockdown, airlines and the hospitality industry was completely grounded, and a few were moved to the graveyard. Now with restrictions being lifted, many of them are coming back in action to reach the pre-COVID levels, and with the vaccine in sight, hopes are high.

Unicorns Of 2020

Like the two sides of a coin, the pandemic has shown the good and worst in the startup ecosystem. There were six startups this year that became unicorns by overcoming the pandemic blues. Three unicorns have emerged in the FinTech space; namely, Razorpay, a payment solutions provider, became the sixth unicorn in the country in 2020 and raised about $100 million in funding. The company presently powers payments for more than five million businesses, including BookMyShow, Ola, Airtel, Zomato, Cred, Swiggy, and ICICI Prudential, among many others.

Another unicorn for the year was Pine Labs, a point-of-sale merchant commerce solution provider that sealed a deal with Mastercard and now serves more than 150,000 merchants. The third unicorn from FinTech space was Zerodha, with $3 billion as its present valuation.

Postman, the software company headquartered in San Fransisco, offers a platform for API development secured $150 million in funding. Postman’s platform is used by more than 500,000 companies across the globe. In the EdTech space, Unacademy raised to unicorn status by raising colossal funding (approx. Rs1125 crore). This EdTech firm has a network of more than 350,000 paid subscribers and 18,000 educators. Even the fashion e-tailer, Nykaa has been valued at $1.2 billion in April 2020.

The Startup Ecosystem Is Looking To A Faster Recovery In India

Although the immediate impact of the lockdown on the startup ecosystem in India was severe, however, the Indian founders are laying foundations to reimagine their businesses; they have realized that to thrive and survive, the only way is to keep pace with the dynamics of this changing world. Many startups have started to reduce their burn and are continuously working to improve their unit economics. A large number of startups turned to digitization. The COVID-19 pandemic has also brought resilience in the startups where some have not only beaten in but have seen exponential growth. The startup ecosystem in India is now showing signs of recovery.

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