At 19%, now nearly one in five tech startups are leveraging deep-tech solutions for their businesses. The pool of deep-tech ventures is expanding at a five-year compounded annual growth rate (CAGR) of 41% — faster than the overall ecosystem, a study said.
Over 2,100 startups adopted deep technologies in their ventures as of 2020, up from the over 1,600 in 2019. Further, 14% of the total startup investments in 2020 were in deep-tech ventures, higher than the 11% in 2019. Up to 87% of these investments were in AI/ML startups in 2020. The Nasscom and Zinnov study further notes that deep tech will continue to grow at a CAGR of 40-45% in 2021.
Tech startups not just stayed afloat amid uncertainties but also converted the crisis into an opportunity, the report said. It noted that ‘digital maturity’ in the ecosystem jumped to 55% in 2020 from 34% in 2018. The acceleration in digital adoption brought about by Covid has resulted in “deep tech getting deep rooted into startups’ DNA”, the report added.
Jatin Desai, managing partner at Inflexor Ventures, a deep tech-focused VC firm, says they have observed a steady growth of such startups pitching to them for investments over three-four years, and anticipates this to continue into 2021.
“We are one of the early, domestic VC funds that invested in deep tech across both our funds — Parampara and Inflexor. Over 50% of our current portfolio companies are deep-tech startups. In Inflexor, which is our Fund II, we anticipate most of our portfolio companies to have aspects of deep tech like AI-ML, AR/VR, IoT, blockchain, big data and other emerging technologies,” he said.
Despite the pandemic, 2020 saw a record number of 12 new unicorns added to India’s startup world — the highest ever in a single calendar year. The country’s tech startup base is estimated to be growing at a scale of 8-10% year-on-year. Nasscom defines tech startups as active technology product or platform companies incepted in the last five years.