Back

Investor outlook 2021: The Indian start-up ecosystem

It is no secret that 2020 was a challenging year for us the industries around the globe. We saw many fundamental changes in the practices of various industries, including the Indian start-up & investor ecosystem. For investors, the initial months of 2020 were especially tough when they had to recalibrate their investable capital. However, the second half of the year seemed much more suitable & in favor of investors. 2020 has also been a strange year when it comes to investment sectors. It was no surprise to see the number of deals fall significantly or see fluctuations for the traditional sectors like fintech & financial services sector. While these conventional sectors did poorly some of the unconventional sectors surprisingly did well. Including, Healthcare & IT which saw tremendous growth compared to any other sector. As we step into the new year here are some of the expectations anticipated from the start-ups of India. Voicing out for local solutions: If 2020 has taught us anything it’s that we can’t take globalization for granted. Our start-ups need to be self-reliant, self-sufficient so that they’re not disrupted in times of crisis or do not suffer the wrath of globalization as we saw during the COVID19 pandemic. Our start-ups need to bring local solutions for the real problems of the local people. Digitization is the new normal: Thanks to the pandemic, more & more organizations are adapting to the methods of digitization. Upcoming start-ups need to adopt digital solutions to better connect with the audience & stay relevant. More collaborative, disciplined leadership: To come out strong of these extraordinary circumstances brought upon by the pandemic, start-ups require strong leadership with an innovative solution to real-world problems. Taking into account everyone’s opinions & suggestions, making it a collaborative effort. While focusing on growth with a more systematic & disciplined approach. Now that we have laid down the anticipated expectations, let’s have a look at some of the expected trends in 2021. Work from Home: Given that the world is yet to fully recover from last years’ ordeal, work from home seems to be one of the most common & visible trends to continue through 2021. Strong local ties: Start-ups will focus more on building a self-sufficient model where solutions could be supplied locally as opposed to relying on the international market. The focus will be on growing the market of India with innovation ventures in line with Prime Minister’s call for ‘Aatmanirbhar Bharat’ Call for Digitization: The upcoming year will see more & more start-ups making significant investments integrating digitization & adopting digital practices, to capture the market. Adopting digital practices will increase transparency & will promote cost-effectiveness. Scaling: As the market is seeing an upward growth across all segments, more & more companies have started to hit the scale, prompting a dominance of Initial Public Offering (IPO). After the formalization of the new regulation, enabling Indian start-ups to directly list on international exchanges, the IPO trends will accelerate even further. Shift of Focus: As a result of work from home, more & more staff relocated to their hometowns from the urban city centers. Meaning, the population started migrating back to tier 2 & tier 3 cities from tier 1. With them, they took back the demographic consumer behavior which will open up new opportunities. For example, the exponential growth of smartphones in tier 2 & tier 3 cities is changing the consumer market, giving an opportunity for start-ups to build products for this specific demographic. SME-SaaS: There’s a new category of start-ups emerging called SME-SaaS. It focuses on India-based SMEs, introducing them to SaaS (Software as a Service) solutions. Take an example of Pagarbook, which looks to digitize human capital management through a mobile-first payroll & workforce management app. Also, Khatabook assists SMEs to digitally record their financial transactions & accept payments online. These help the SME start-ups cut on costs & work in a smart & efficient manner which in turn results in their overall growth. 2021 is surely going to be an interesting year to look forward to. As we wait for the eventual departure of the pandemic, we can also anticipate some new, innovative business models that the upcoming start-up ecosystem will bring along.