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AI, IoT and Blockchain Drive Growth
A recent report by SAP India and Dun & Bradstreet highlighted a transformative trend within the Indian startup ecosystem, revealing that over 77 percent of Indian startups are actively investing in advanced technologies such as artificial intelligence (AI), machine learning (ML), Internet of Things (IoT), and blockchain. This surge in technology adoption underscores the critical role these innovations play in shaping the future of Indian entrepreneurship.
Sanket Deodhar, Vice President and Head of Digital Natives at SAP Indian Subcontinent, highlighted the importance of technology as a cornerstone and key differentiator for startups aiming to achieve sustainable business models and better financial performance. His insights suggest that startups are increasingly recognizing the need to integrate advanced technologies to maintain competitive advantages and ensure long-term success.
Focus on gross margin rather than gross merchandise value
The report indicates a notable shift in focus among startups from Gross Merchandise Value (GMV) to Gross Margin (GM), with 85 percent of startups viewing unit economics as a clear path to profitability and improved valuation. This shift reflects a growing awareness that sustainable growth and financial health depend on strong unit economics, which provide a clearer picture of a company’s operational efficiency and profitability potential.
Additionally, 79 percent of startups consider the adoption of enterprise applications integrated with new-age technologies essential to scale operations and improve unit economics. This trend highlights the strategic importance of leveraging technology to streamline business processes and optimize resource allocation, ultimately resulting in better financial results.
A thriving startup landscape
India’s startup scene continues to thrive, securing the third position in the global startup ecosystem, behind only the US and China. The country now boasts of 300,000 startups, including 113 unicorns, demonstrating its rapid growth and innovation potential. This vibrant ecosystem is a testament to India’s entrepreneurial spirit and its ability to foster game-changing ideas that have a significant impact on the global stage.
The report also sheds light on the geographical diversification of India’s tech startup scene. In 2023, Tier II and III cities emerged as major innovation hubs, with 40 percent of the total tech startups coming from these areas. Cities like Chandigarh, Jaipur, Madurai, Indore, and Kochi now host 15 percent of India’s tech skills pool, indicating a more distributed growth pattern across the country. This geographical distribution not only democratizes access to tech innovation but also encourages a more inclusive growth trajectory for the nation’s startup ecosystem.
DeepTech: The Future of New Startups
The adoption of advanced technologies is not limited to established startups. The report reveals that 25 percent of newly founded technology startups in 2023 were already using DeepTech, signaling a strong inclination toward cutting-edge innovations from the start. This early adoption of advanced technologies suggests that new startups are positioning themselves at the forefront of technological advances, which can provide them with significant competitive advantages as they expand and mature.
As Indian startups continue to leverage technology for growth and sustainability, the country’s position as a global tech powerhouse looks set to strengthen further. This trend not only promises to drive economic growth, but also positions India at the forefront of tech innovation on the global stage.
The road ahead
The insights from the SAP India and Dun & Bradstreet report point to a bright future for Indian startups driven by technology adoption. By focusing on unit economics and integrating advanced technologies into their operations, startups are not only improving their profitability and valuation but are also contributing to the broader economic development of the country. The growing influence of tier II and III cities as innovation hubs further enriches the startup landscape, fostering a more inclusive and diverse ecosystem.
In conclusion, the Indian startup ecosystem is witnessing a transformative change fueled by advanced technologies. This evolution is poised to cement India’s status as a global leader in innovation and entrepreneurship, driving sustained economic growth and showcasing the immense potential of its entrepreneurial talent on the global stage.