India has the world's third-largest startup ecosystem, with annual growth of 12-15 percent projected year over year.

In 2018, India had about 50,000 startups, with around 8,900–9300 of them being technology-based. In 2019, alone, 1300 new tech startups were founded, meaning that 2-3 new tech startups are founded every day. Backed by $3.5 billion funding in 2020, about 1,600 new startups were added, which helped India maintain its position as the third-largest startup hub in the world.

India currently has the world's third-largest startup ecosystem, with 38 unicorns (companies valued at more than $1 billion). Despite the economic disruption caused by the Covid-19 pandemic, the country generated about 12 unicorns in 2020.

Bangalore, NCR, and Mumbai continue to lead as the major startup hubs in the country. Bangalore is one of the world's top 20 startup cities. It is also one of the top five fastest-growing startup cities in the world.

Startup growth rates differ greatly depending on the sector, region, and stage of development of the company. According to a survey conducted by early-stage venture investor 100X VC, nearly 47 percent of startup founders are currently experiencing growth, with another 42 percent expecting the same in the next six months.

According to the second edition of the ‘India Sentiment Outlook Survey,' which polled 275 founders and 77 investors across sectors, about two-thirds (65%) expect seed-stage funding from investors to increase this year.

Almost 88% of early-stage ventures are looking to raise funds in the next 3-6 months according to the survey.

Healthcare has undeniably emerged as one of the most important industries as a result of the changed perspectives, and it is expected to remain so in the post-pandemic period as well. According to the report, 89 percent of investors are becoming more aligned to this sector as they see its future potential.

“Over the past year, we have seen the Indian startup segment giving a strong pushback to the Covid-19-induced market landscape. We believe that the optimistic outlook of both startups and investors, as also seen in the survey results, is an encouraging factor,” said Sanjay Mehta, founder, and partner, 100X.VC.

According to the second edition of the ‘India Sentiment Outlook Survey,' which polled 275 founders and 77 investors across sectors, about two-thirds (65%) expect seed-stage funding from investors to increase this year.

Profit is what motivates market participants. As a result, it comes as no surprise that 86 percent of investors are now searching for sectors that can profit from the crisis.

“We are at the stage where it’s never been easier to start a business, never been easier to raise funds and it’s never been easier to scale. This ecosystem has the perfect mix of opportunity, growth potential, and momentum,” said Tuhin Sharma, cofounder of on-demand automation company Accio Robotics.

In terms of funding sources, angel investors and individual investors (34 percent) topped the list, while micro-VCs were the second option for founders, with about 21percent saying they would use such funds. About 18% of founders opted to raise money from venture capital funds.

“Covid-19 has generated mixed sentiments among all sections of society. While credit has dried up for most, equity flows are at an all-time high. It’s a time of flux and uncertainty that the world has never seen for this long,” said Siddarth Pai, founding partner, 3One4 Capital. “The report helps get a pulse of investor sentiment and will inform the powers that be of the reforms required to convert these sentiments to action.”

Angel network syndicates (13%), private equity (4 percent), and family offices (3 percent), according to the study, were the other sources of funding.

Around 33 percent of businesses said they would grow into new markets, while another 29 percent said they were looking to recruit actively and 21 percent said they were looking to expand their product portfolios.

Other main areas of focus for startups were expanding the runway and conserving cash.

Business valuations are also predicted to skyrocket, with 28 percent of startup founders claiming that valuations have risen and 41 percent predicting that they will rise shortly.

Around 19 percent said there had been no improvement, while 6 percent said it had decreased or was about to decrease.

“I believe ‘Next Big What’ will be from India. Looking at the current Indian Startup ecosystem, the resource utilization, innovation, out-of-box thinking, striving to make complex things simpler and support from the investor community are driving our startup ecosystem to newer heights,” said Akash Nidhi PS, cofounder, and chief technology officer of Vitra.ai -- a simple drag-and-drop application to translate videos with voice and lip-sync to more than 50 languages.

Angel investors accounted for 51percent of the 77 investors polled, while venture capital funds accounted for 21 percent, micro-VCs accounted for 9 percent, and family offices and angel networks accounted for 7percent each.

According to the survey, about 70 percent of all respondents said they were seeing business growth, with 23 percent expecting it in the next few months. Meanwhile, 68 percent of portfolio companies were being asked to be more aggressive, while 30 percent were being told to keep things the same.

While the investors advise the founders to cut costs, increase runway, and participate in business expansion when they detect a market's potential, they also believe that VCs should spend enough time before raising funds because market dynamics change quickly. The team at 100X.VC believes that maintaining a steady relationship with investors can be advantageous to entrepreneurs in the long run.

Businesses are recognising the disruptive potential of start-ups and partnering/investing in them as a result. The Indian government recognises the importance of collaborating with disruptive innovators at all stages of the value chain and leveraging their technologies to enhance public service delivery.