In a recent study by TiE Delhi-NCR and Zinnov, "COVID-19 & the Antifragility of Indian Startup Ecosystem," it was found that Indian startups are estimated to create around 25,000 direct jobs this year to negate the impact of the virus outbreak, which initially cost an equal number of jobs from many startups across sectors.
This is aided by several sectors seeing a two to five times growth in revenue or GMV due to pandemic-induced demand. These include online insurance, education and tele-consultation apart from e-payments, grocery and online stock brokerage that have also surpassed pre-COVID sales.
According to the report, equity funding in July-September hit nearly $2.79 BN, coming close to the January-March figure of $2.84 billion in funding. This had dropped to $1.3 BN in April-June. While seed and late-stage investments have shown better recovery, early stage deals are still seeing a gradual recovery. Total funding for startups in 2019 was $14.5 BN.
In terms of job creation, a total of around 1.6 million direct jobs are being estimated to be created by 2025 by Indian startups — nearly double of current numbers for 2020.
“In terms of indirect jobs, they were impacted as many companies had to take dramatic moves in spaces like ride-hailing and hospitality. So, indirect jobs will only get to 75-80 percent of pre-COVID levels by the end of 2020, but that again is not bad,” said TiE (Delhi-NCR) president Rajan Anandan. He is also MD at Sequoia Capital India, the country’s biggest venture capital firm in terms of assets under management.
While the fund flow is encouraging for startups, the additional job creation will come from the steady rate of startups being formed in India — around 4,000 per year. India currently has 40,000 startups and the count is expected to hit the 60,000 mark by 2025. In terms of startups valued at $1 BN or more, known as unicorns, the report said India is on track to have 100 unicorns by 2025 compared to 33 currently, despite COVID-19.
Startups, across scale, were also hit by the pandemic as 15 percent of them had to halt their operations, while 41 percent have seen a negative impact. The sectors mentioned earlier have seen the positive impact of COVID, but mobility, automotive, travel & hospitality, fitness and wellness are among the sectors reeling under pressure who need policy support for recovery.