The year 2020 started in the Indian startup ecosystem with a rapid flowering of more than 38,000 startups. However, the outbreak of the KOVID-19 pandemic led to a multilevel disruption of the entire start-up ecosystem, in particular during the period of closure. Numerous layoffs, company closures, and wage cuts negatively affected nearly 40% of India’s start-ups between March and June 2020.
Bilateral pandemic strike
As a result of the disruption caused by the coronavirus epidemic, many start-ups saw their revenues decline, but some experienced unprecedented growth. The current lock-in, coupled with travel restrictions, has led consumers to focus more on digital categories such as tech, e-commerce, and online games.
The EdTech industry is booming and the pioneers have made quality education available throughout the country. The closure of schools, colleges, and further training centers has accelerated the growth of the distance learning model. Investors have also shown great interest in the education sector. Byju, India’s leading start-up EdTech, has managed to attract 6 million new students to its free education platform. Many education startups have been successful in raising significant funds – Tiger Global’s $200 million investment in Baiju, followed by $200 million from General Atlantic and $100 million from Mary Mickers Bond Capital, is one of the largest investments by an IT startup.
The same high level has also been found by different e-commerce platforms. When people are connected to their home, the only option is to order online. The trend towards online ordering had already started but has become more pronounced this year. Restrictions on public gatherings have led to the growth of online gambling. From household items to groceries, people turn to online platforms. In August 2020, the Zomato Meal Order Aggregator received $250 million in funding.
The start-ups in the fields of medicine, biotechnology, and healthcare have shown innovation and offered solutions during this crisis, despite the heavy blow that the pandemic has dealt with them. Companies such as Bione, MyLab, Redcliffe Life Sciences, and Nocca have developed COVID-19 test kits, fans, and other diagnostic solutions.
However, some of them were unable to survive the flooding caused by the pandemic. More than 70% of the start-up transport and travel companies experienced a 40% drop in turnover. As a result of a total travel ban during the closure, aviation and hotel activities were completely paralyzed and some were moved to the cemetery. Now that the restrictions have been lifted, many have returned to action to reach pre-VIDOC levels and the vaccine is on the radar, expectations are high.
Like two sides of a coin, the pandemic has shown the good and the bad in the original ecosystem. This year six starters were unicorns, which conquered the pandemic blues. Three unicorns appeared in the FinTech space, and Razorpai, a provider of payment solutions, became the country’s sixth unicorn in 2020, raising nearly $100 million in funding. The company currently makes payments to more than five million companies, including BookMyShow, Ola, Airtel, Zomato, Cred, Swiggy, ICICI Prudential, and many others.
Another unicorn of the year was Pine Labs, a supplier of point-of-sale solutions that entered into an agreement with Mastercard and now serves more than 150,000 merchants. The third unicorn in the FinTech space was Zerodha, which has an estimated current value of $3 billion.
Postcode, a San Francisco-based software company, offers an API development platform funded to the tune of $150 million. The Postman platform is used by more than 500,000 companies worldwide. In the EdTech room, Unacademy has achieved unicorn status by raising an enormous amount of money (about 1,125 rupees crore). This EdTech company has a network of over 350,000 paying subscribers and 18,000 teachers. Even fashion shopping service provider Nykaa was valued at $1.2 billion in April 2020.
Starting up ecosystem seeks faster recovery in India
While the immediate impact of the lock-in on India’s start-up ecosystem was serious, India’s founders laid the foundation for a change in mentality; they realized that the only way to flourish and survive was to keep up with the dynamics of this changing world. Many start-ups have started to reduce their combustion rate and are constantly striving to improve the profitability of their devices. A large number of launches went digital. The COVID-19 pandemic also put startups on the map, some of which not only won but also grew exponentially. India’s nascent ecosystem is now showing signs of recovery.