India's Tech Startups See 2.1X Growth, Rise in Deeptech: NASSCOM
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India's thriving digital economy and strategic reforms have propelled its GDP growth rate to 6.4 per cent, but beneath this macroeconomic stability lies a vibrant tech startup ecosystem that is rapidly evolving, said a NASSCOM report.
In Calendar Year 2024 (CY24), India witnessed a 2.1X growth in new tech startup creation over CY23, with tier-2 and tier-3 cities emerging as hotbeds of innovation. A key pillar driving this surge: changing trends in startup funding.
Even amid cautious global capital flows, Indian startups attracted diversified funding in CY24, with investors showing increasing conviction in DeepTech, ClimateTech, and AI-enabled solutions. Traditional favorites like fintech and edtech saw tempered enthusiasm, while sectors aligned with national priorities, such as healthtech, agri-tech, and sustainability, gained prominence.
This shift has seen capital moving towards solutions rooted in infrastructure resilience, digital public goods (DPGs), and advanced manufacturing, rather than pure consumer-centric plays.
CY24 also witnessed a maturing investor base in India. While global VC participation remained significant, domestic capital, from family offices, corporates, and alternative investment funds (AIFs), grew in prominence. India's investors are becoming more strategic, with a focus on sustainable, long-term value creation over quick exits.
The DeepTech funding landscape, previously underserved, is now gaining structured support through specialized funds, government-backed schemes, and corporate innovation programs. This comes at a time when investors are willing to take longer bets on technologies that could power India's next decade, such as quantum computing, space tech, and biotech, said the report.
India's startup ecosystem now hosts 800+ incubators and accelerators, a ~1.5X growth since CY19. Notably, corporates have also increased their involvement in early-stage support, offering mentorship, market access, and pilot opportunities through CVC arms and innovation labs. This has helped build founder confidence and bridge the infamous "valley of death" in funding.
One of the bright spots in CY24 has been the renewed momentum in startup exits, through both secondary sales and strategic acquisitions. With increasing domestic IPO ambition and rising M&A activity, investors are regaining confidence in achieving liquidity, even in a more cautious funding climate.
According to the report, a majority of Indian tech startups surveyed in CY24 indicated that they outperformed their growth projections and remained optimistic about revenue and fundraising opportunities in CY25.
Despite the upward trends, challenges remain, especially around follow-on funding, slow due diligence cycles, and valuation mismatches. Founders are increasingly vocal about the need for patient capital, more localized funds, and reduced regulatory friction.
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