Indian tech start-ups confident of revenue acceleration, cash availability improvement: Nasscom

There has been an increased interest from venture capital firms and funding agencies to invest in seed-early stage start-ups, according to Nasscom.

While the ecosystem continues to be cautious, it is increasingly looking at hiring talent with the right competencies. (Pixabay)

Indian tech start-ups are witnessing a gradual recovery with revenue acceleration and funding improving their cash availability and giving them longer runway to operate, according to IT industry body Nasscom.

Nasscom had conducted a 'Start-up Pulse Survey II' to understand what has changed and what the next six months look like for the tech start-up ecosystem in the country. The first survey was conducted in April–May this year.

As per the findings of the latest survey, revenue acceleration and funding has improved the cash availability with start-ups.

About 43 per cent of the tech start-ups said they have a runway for more than six months, compared to 8 per cent in the earlier survey.

"COVID-19 has accelerated digital adoption and tech start-ups can leverage this opportunity with enterprise and SMB clients for product adoption. Greater focus on the shift to online has also created new business opportunities," Nasscom said.

Nasscom said government initiatives such as Atmanirbhar Bharat, digitalisation of India, a greater focus on sustainable business models is attracting VC interest for Indian tech start-ups.

Almost 25 per cent of the surveyed start-ups have been able to raise funds or find prospective investors as compared to 7 per cent in the earlier survey.

Sectors like edu-tech, health-tech, SaaS (software as a service) and SMBs continue to attract investor interests, it said.

Nasscom noted that four start-ups became unicorns (companies with valuation of over USD 1 billion) despite the pandemic, while 30 per cent of B2B start-ups recorded rise in revenues.

Also, there was a 2.5X growth in number of tech start-ups seeing over three-plus months runway compared to the first survey.

"The Indian start-up ecosystem has set a global benchmark in remained resilient during this disruptive year. Setting an example for many other industries across the globe to follow and learn from how Indian start-ups converted challenges into opportunities," Nasscom President Debjani Ghosh said.

A large pool of tech start-ups, strong innovation focus and entrepreneur's zeal have been the growth drivers of this ecosystem, she added.

"We are pleased with the way the ecosystem has been supportive of each other during these difficult times and hope that the industry remains its robust zeal to further contribute to reviving the economy," she said.

While the ecosystem continues to be cautious, it is increasingly looking at hiring talent with the right competencies.

As per the findings of the survey, hiring freeze at tech start-ups dropped by 20 per cent, and jobs with the right skills continue to be in demand.

Digital skills -- data, AI, product management, cloud architects -- continue to be in high demand across the tech start-up ecosystem, it added.

However, to ensure this road to recovery, continued support from the ecosystem is required, Nasscom said.

It called out five key imperatives for start-ups to sustain growth momentum -- optimising operational metrics, expanding or pivoting towards growing or upcoming verticals, 'Vocal for local' products and solutions and creating a larger social and economic impact, fostering trust-based partnerships with ecosystem players and customers, and enabling and encouraging digitisation of impacted areas.