Start-ups’ losses Vs rise in capital


In India, start-ups have bought revolution and transformation in certain sectors. Although the pandemic had an impact on the number of new startups launched, which fell by 70% from 3,500 (2019) to 1,050 (2020), Indian startups recorded a total funding of $11.5 Bn, which is just 10% lower than 2019. 90% Indian startups failed within the first five years, lack of innovation being the main reason. The Indian startup ecosystem saw 924 deals in 2020, 14% higher than 2019.


Indian Unicorns have been hit doubly hard with demand and liquidity crunch. At the same time, we have seen failures in growing numbers in the sectors like Logistics, e-commerce and food technology . However, the pandemic has knocked the well-known startups like Ola, Paytm, OYO, BigBasket, Zomato, Swiggy down to their knees.


India is a follower market and highlighted as the third-largest startup ecosystem in the world, but it also tops the list for failed startups. In 2020, despite many challenges due to the pandemic, Indian startups continued to battle hard, raising $9.4 billion across 881 deals, and adding 14 companies to the unicorn club.

Investors and founders said the increase in deal flow is primarily led by significant liquidity in the venture capital space and overall bullishness in the technology sector across private and public markets, globally. The State Of Indian Startup Ecosystem 2020 — in an optimistic scenario, the total funding amount in 2020 would reach $11.3 Bn (which was 11% lower than 2019).

So, the startup ecosystem has performed slightly better than expectations. Trends show that higher revenue increase has also resulted in higher net losses. Compared to 2020,both the funding amount and deal count will surge 19% and 13% respectively.