Is India on track to become a software product powerhouse?

India started off as an IT outsourcing centre and is now looking to transform itself into a SaaS and deep tech hub fuelled by start-ups.

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India has the third largest start-up ecosystem in the world. While B2C unicorns like digital payments platform Paytm, ride-hailing app Ola and food delivery company Swiggy often grab the spotlight, B2B tech start-ups have been charting out a quiet growth story for the past few years.

India’s first ever unicorn, InMobi is a B2B mobile ad tech company that achieved its status in 2011. According to a recent study by Netapp Excellerator, an open innovation program for start-ups and management consultancy Zinnov, 14 out of India’s 32 unicorns so far are B2B, while three B2B companies joined the unicorn club this year out of a total seven.

More significantly, early and late stage investment in the B2B start-up space has nearly doubled in 2019 with total funding going up to USD 3 billion. B2B tech start-ups now constitute 44% of the country’s 9200 start-ups rising steadily from 29% in 2014, the Netapp Zinnov report has found.

“With a few notable exceptions, existing Indian B2B unicorns serve large enterprises, predominantly in the global market,” says Atit Danak, Principal and Head at Zinnov’s program to enable collaboration between start-ups and corporate houses, Zinnov - CoNXT. “But we are seeing a different trend in the new wave of start-ups. As small businesses turn to technology to deal with Covid disruption, and Indian SMEs also look for digital solutions, there is a good mix of start-ups focused on large enterprises and SMBs.”

The latest Start-up Pulse survey by NASSCOM, a not-for-profit industry association, reflects the resilience shown by B2B start-ups during the pandemic period. After a brief setback in the first half of 2020, three-quarters of Indian B2B tech start-ups expanded to new verticals and nearly 30% recorded a rise in revenue. Fifty six percent of B2B start-ups have also said they expect funding to reach pre-Covid levels in the coming 6+ months.

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