70% of Indian Startups Bet Big on AI to Power Growth By CIOTechOutlook Team

70% of Indian Startups Bet Big on AI to Power Growth

CIOTechOutlook Team | Friday, 05 January 2024, 02:30 IST

As per new survey released by Nasscom in collaboration with consulting firm Zinnov, as many as 70% of companies are investing in artificial intelligence (AI) to improve product capabilities and internal efficiencies.

As per the Indian Tech Startup Landscape Report 2023, over 950 new technology startups were founded and over 750 were funded in the past year, as per economic times.

“In 2023, despite facing global economic and regulatory challenges, Indian tech startups have prioritised the imperative of enhancing their business fundamentals, driving profitability and growth,” said Nasscom president Debjani Ghosh.

The country today has over 31,000 tech firms, with a total funding of more than $70 billion over the last five years. Furthermore, the proportion of tech startups developed in developing hubs in tier-2 and tier-3 cities is expected to reach 40% by 2023.

“Tier-II/III cities are transforming into new innovation hubs, decentralising the start-up landscape,” said Zinnov CEO Pari Natarajan, adding that India's tech startup ecosystem continues to grow at an impressive clip.

According to the research, startups received $6 billion in equity capital last year, with 72% of all funding going to the seed stage, up from 64% in 2022.

The survey found a considerable fall in late-stage funding due to valuation cuts and a stronger focus on profitability in the midst of the 'funding winter' afflicting businesses worldwide. The top three challenges founders experienced in 2023 were cash flow issues, finance availability, and limited demand.

“The ecosystem is likely to see improvement in funding, impending IPOs taking place, and innovation across disruptive technologies and key sectors,” the report noted.

In 2023, deal volume was 824, a 48% decrease from the previous year. Nonetheless, almost 60% of company founders polled reported improved revenue and profitability in 2023.