Start-ups raised a record $24.1 billion in 2021: study

Two-fold rise from pre-COVID levels, according to a new study by NASSCOM and Zinnov.

January 21, 2022 06:24 pm | Updated January 22, 2022 03:05 am IST - New Delhi

Representational image

Representational image

Start-ups raised a record $24.1 billion in 2021, a two-fold increase over pre-COVID-19 levels, according to a new study by NASSCOM and Zinnov.

According to the study, ‘Indian Tech Start-up Ecosystem: Year of The Titans’, more that 2,250 start-ups were added in 2021, over 600 more than what was added in the previous year.

The study said: “Start-ups raised USD 24.1 billion in 2021, a two-fold increase over pre-COVID levels. In comparison to 2020, there was a 3X increase in the number of high value deals (deals > USD 100 million), demonstrating investor confidence with a pool of active angel investors of 2400+ and a readiness to take significant risks.”

It added that while the U.St. remains the leading source of foreign direct investment (FDI) in start-ups, worldwide involvement is also growing. About 50% of the deals had at least one India-domiciled investor.

It said that more than $6 billion has been raised via public markets with 11 start-up IPOs in 2021. The study added that the startup ecosystem saw a 2X gain in cumulative valuation from 2020 to 2021, with an estimate of $320-$330 billion, demonstrating the sector’s development and recovery throughout the pandemic.

“In the last decade, the ecosystem has played a key role in growing direct and indirect jobs, providing 6.6 lakh direct jobs and more than 34.1 lakh indirect jobs,” it said. The industries that saw the most net new job creation were BFSI (banking, financial services and insurance), ed-tech, retail and retail tech, food-tech, supply chain management, and logistics and mobility.

On the back of Internet commerce, freelancers, and service industries, indirect jobs have also recovered, it said.

“The performance of the Indian startup ecosystem in 2021 has proved the resilience and dedication being put by multiple startups across segments….With record-breaking funding, an increase in the number of unicorns, jobs being created in the near term, the Indian startup ecosystem’s future looks even brighter going ahead in 2022,” Debjani Ghosh, president, NASSCOM, said.

When compared to the U.K., U.S., Israel and China, 2021 has been an outstanding year for the Indian startup ecosystem, with the highest growth rate in terms of deals, both in seed stage and late-stage funding, and the number of startups, Pari Natarajan, CEO, Zinnov, said.

Mr. Natarajan added that Indian firms have done an outstanding job of selling to global markets, notably in categories such as global SME (small and medium enterprises) and developer ecosystem.

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