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Startup Funding, Job Creation Showing Recovery To Pre-Covid Levels, Reveals Report

Startup Funding, Job Creation Showing Recovery To Pre-Covid Levels, Reveals Report

Local startups will create around 25,000 direct jobs this year to negate the impact of the Covid-19 pandemic

Total funding for startups in 2019 was $14.5 Bn

In terms of job creation, a total of around 1.6 Mn direct jobs are being estimated to be created by 2025

The Covid-19 pandemic and the resultant lockdown wreaked havoc on the operations of Indian startups. However, the sector is showing signs of recovery in terms of funding and creation of jobs, with both expected to match and surpass pre-Covid numbers by the end of 2020, claims a report from TiE (Delhi-NCR chapter) and management consultancy Zinnov.

The report further highlights that the local startups will create around 25,000 direct jobs this year to negate the impact of the Covid-19 pandemic.

As per the report, equity funding in July-September hit nearly $2.79 Bn, coming close to the January-March figure of $2.84 Bn 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.

Meanwhile, the report says that in terms of job creation, a total of around 1.6 Mn direct jobs are being estimated to be created by 2025.

“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% of pre-Covid levels by the end of 2020, but that again is not bad,” TiE (Delhi-NCR) president Rajan Anandan told ET.

An Inc42 report from July revealed that this year could see several Indian startups in the consumer internet space, in sectors such as travel and tourism, and entertainment and merchandising, go for down-rounds — when the company’s valuation is lower than in a previous financing round. 

A recent Inc42 Plus report, “State Of Indian Startup Ecosystem 2020”, predicts two possible scenarios in relation to the funding for Indian startups this year. Worryingly, both scenarios predict a sizable fall in funding amount for the Indian startup ecosystem this year. 

This year, fintech has been the best performing sector in terms of funding deals for startups, with $543 Mn raised from 62 deals. Edtech with $452 Mn from 44 deals, consumer services with $590 Mn from 43 deals, enterprise tech with $789 Mn from 41 deals and healthtech with $370 Mn from 40 deals were the five best-performing sectors for the Indian startup ecosystem in H1 2020.