In a recent study by SAP India and Dun & Bradstreet, over 77% of Indian startups have been reported to invest in advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), the Internet of Things (IoT), and blockchain. This surge in technological adoption underscores the rapid evolution of the Indian startup ecosystem, now ranked third globally, following the United States and China.
The study highlights that Indian startups are leveraging these advanced technologies to enhance operational efficiency, drive growth, and improve customer experiences. This proactive integration of new technologies marks a significant shift in the startup landscape, reflecting a broader trend of digital disruption. Notably, the report emphasizes the rise of Tier II and III cities as burgeoning innovation hubs, with 40% of tech startups emerging from these regions. These cities, including Chandigarh, Jaipur, Madurai, Indore, and Kochi, benefit from local talent and lower costs, contributing to India’s stature as a global startup powerhouse.
Sanket Deodhar, Vice President and Head of Digital Natives at SAP Indian Subcontinent, remarked, “The Indian startup community stands at an inflection point. As companies shift their focus from Gross Merchandise Value (GMV) to Gross Margin (GM) and aim to build sustainable business models with transparent financial data, technology remains a cornerstone for achieving these goals. At SAP, we are committed to helping our customers transform into intelligent, growth-oriented, and sustainable enterprises.”
The report reveals that 79% of startups believe that adopting Enterprise Applications integrated with technologies like AI is crucial for scaling and improving unit economics. Additionally, 72% of startups are either already investing in or planning to invest in new-age technologies. A notable 85% of startups view unit economics as essential for profitability and enhancing valuation.
The rise of Tier II and III cities as innovation hubs is further highlighted, with these areas now hosting 15% of the country’s tech talent pool. The cost benefits, such as lower real estate rentals and talent costs, make these cities attractive for startup growth.
The adoption of new-age technologies is transforming various sectors. In agritech, AI-powered drones and IoT devices are optimizing farming practices. In fintech, AI algorithms are improving credit scoring and risk assessment. Edtech is leveraging AI, Augmented Reality (AR), Virtual Reality (VR), and gamification for personalized learning experiences. In health tech, telemedicine and AI/ML are providing real-time insights for improved healthcare delivery.
‘India’s startup ecosystem is thriving, fueled by a favorable regulatory environment, a growing middle class, and a tech-savvy youth population,’ said Avinash Gupta, Managing Director and CEO, India, Dun & Bradstreet. ‘With almost 300,000 startups and 113 unicorns across diverse sectors, India ranks third globally in its startup ecosystem. Government support, ample venture capital, and a talented workforce have driven growth in key sectors. The rise of Tier II and III cities as innovation hubs has further decentralized economic development.’
As startups navigate funding challenges and market volatility, the focus on unit economics and profitability is paramount for building sustainable enterprises. This report provides a comprehensive analysis of the current startup ecosystem, offering strategic insights into evolving dynamics in valuations, trends, and the critical role of technology in their growth journey.
