A recent report by SAP India and Dun & Bradstreet highlighted transformative trends in the Indian startup ecosystem, revealing that over 77% of Indian startups are actively investing in emerging technologies such as Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), Blockchain, etc. This surge in technology adoption underlines the critical role that these innovations are playing in shaping the future of entrepreneurship in India.
Sanket Deodhar, vice president and head of Digital Native, India Subcontinent, SAP, highlighted that technology is the foundation and key differentiator for startups looking to build sustainable business models and improve financial performance. His views suggest that startups are increasingly realizing the need to integrate advanced technologies to stay competitive and ensure long-term success.
Emphasis on gross profit over total product value
The report finds a notable shift in focus among startups from gross margin (GMV) to gross profit (GM), with 85% of startups seeing unit economics as a clear path to profitability and increased valuation. This shift reflects a growing recognition that sustainable growth and financial health depend on strong unit economics, which provide a clearer indication of a company’s operational efficiency and profitability potential.
Additionally, 79% of startups believe that adopting new-age technologies and integrated enterprise applications is essential to scale their operations and improve unit economics. This trend highlights the strategic importance of leveraging technology to streamline business processes, optimize resource allocation, and ultimately improve financial outcomes.
Vibrant startup environment
India’s startup environment continues to thrive, securing the third-largest position in the global startup ecosystem after the US and China. Currently, India is home to 300,000 startups, including 113 unicorns, demonstrating its potential for rapid growth and innovation. This vibrant ecosystem is a testament to India’s entrepreneurial spirit and ability to nurture breakthrough 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. By 2023, Tier II and Tier III cities will emerge as key innovation hubs, with 40% of the total tech startups emerging from these regions. Cities such as Chandigarh, Jaipur, Madurai, Indore and Kochi currently account for 15% of India’s tech skill pool, signaling a more distributed growth pattern across the country. This geographical spread will not only democratize access to tech innovation but also facilitate a more inclusive growth trajectory for the country’s startup ecosystem.
Deep Tech: The New Future of Startups
The adoption of advanced technologies is not exclusive to established startups: the report finds that 25% of newly founded technology startups in 2023 will already be leveraging deep tech, demonstrating a strong propensity for cutting-edge innovation from the get-go. Early adoption of advanced technologies suggests that startups are at the forefront of technological innovation, which can give them a significant competitive advantage as they scale and mature.
As Indian startups continue to leverage technology for growth and sustainability, the country is set to further strengthen its position as a global technology powerhouse, a trend that will not only boost economic growth but also position India at the forefront of technological innovation on the global stage.
The Road Ahead
Insights from the SAP India and Dun & Bradstreet report point to a bright future for Indian startups, driven by technology adoption. With a focus on unit economics and integrating advanced technology into their operations, startups are not only increasing their profitability and valuation but also contributing to the broader economic development of the country. The growing influence of Tier II and Tier III cities as innovation hubs is further enriching the startup environment, fostering a more inclusive and diverse ecosystem.
In conclusion, India’s startup ecosystem is showing signs of transformation, driven by advanced technology. This evolution will cement India’s position as a global leader in innovation and entrepreneurship, drive sustained economic growth, and showcase the immense potential of Indian entrepreneurial talent on the global stage.
