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How India’s Deep Tech Startup Ecosystem Is Poised For Growth

How India’s Deep Tech Startup Ecosystem Is Poised For Growth

There has never been a more exciting time for India’s artificial intelligence and deep tech startup ecosystem, which is at a tipping point. According to our independent study, the Artificial Intelligence industry in India is currently estimated to be $180 million annually in revenues and there are approximately 29,000 AI professionals in India. In an earlier research report, Zinnov indicated that India is the third largest AI startup ecosystem with Bengaluru a leading hub for deep tech startups, followed by Hyderabad and NCR. Investors are handing big bucks to Indian AI startups with India soon becoming home to a clutch of biggest privately backed deep tech startups.

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The rise of New-Age Advanced-Tech Startups

Earlier this month, Dubai police signed a MoU with Gurgaon-based Staqu Technologies for predictive policing solutions. In terms of private investment, earlier this year, 2015 founded SigTuple raised $19 Mn in a Series B funding round led by Accel Partners and IDG Ventures. US-based computer vision startup Netrdayne raised $16M in total funding from Reliance Industries in 2016. Tupplejump, an ML-focused Hyderabad-based startup grabbed headlines when it was Machine Learning & Data Analytics platform from Hyderabad, was acquired by Apple on 23 September 2016. Meanwhile, in July 2017, Google acquired Bengaluru-based AI startup Halli Labs, joining Google’s Next Billion Users team. In May 2017, San Francisco-based made its first investment in Bengaluru-based, Sachin Jaiswal led The total base of advanced tech startups currently stands at 700+, with AI being the fastest growing segment.

According to a report from Inc42, a few high-profile AI startup acquisitions in the last year have been  SmarterMe, a personal assistant for sales which was bought by Detroit-based e-Zest Solutions. In a similar vein, 2015-founded SIFTR Labs, AI startup was snapped up by APUS,  Chinese mobile Internet company APUS Group in March 2017.

Exponential Rise in Funding and M&A

On one hand, India-based deep tech startups have drawn the attention of big tech giants like Google and Apple, in terms of funding the country trails behind bullish China and US, home to the largest number of AI startups. According to a NASSCOM Startup Report 2017, the total number of advanced tech startups is 700+. An ET report hinted that traditionally investors leaned towards B2C startups, food tech, retail tech or e-commerce since these models scaled quickly. Enterprise deep tech startups lacked investment due to the scalability issues and lack of returns, but things are gradually changing for enterprise deep tech startups in India. Also, the sales cycles in deep tech-focused startups take a long time. According to HBL report, deep tech startups need around $30 million in funding rounds to strengthen the product pipeline.

Deep tech startups are gradually making their presence felt. A niche set of deep tech startups are changing the funding game. Here’s how — in November 2017 Chennai-based Uniphore Software Systems raised Series B round of funding from Cisco’s John Chambers. This IIT Chennai incubated startup provides voice assistant and speech recognition solutions.

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Another win for the deep tech sector has been the inception of Bharat Innovation Fund, IIM-Ahmedabad’s deep tech-focused fund which aims to provide capital access, business development and partnership connect opportunities to startup founders. Recently, BIF made news for closing the $100-million corpus. The fund is managed by Kunal Upadhyay and Shyam Menon along with other members and aims to drive IP-driven innovations across fields such as machine learning, AI, IoT among others. The fund will catalyze access to market and provide mentorship opportunities to startup founders. According to a NASSCOM report, advanced tech startups in the area of AI, AR, VR, Blockchain and IoT are growing at a rate of CAGR 30%.


Besides, global tech conglomerates looking for new geographies to invest and innovative solutions are drawn towards Indian startup ecosystem. R Chandrashekhar, President, NASSCOM mentioned in a report that the Indian startup ecosystem is maturing and NASSCOM will continue its drive towards catalysing deep tech start-ups, build category leaders and support start-ups to create for India. Reiterating the support for deep tech-focused startups in India, NASSCOM report revealed that it will continue to catalyze and support deep tech Startups, and help build category leaders who can create viable solutions for India. When it comes to startups, NASSCOM will help founders with relevant go-to-market strategies, business development and also drive building products that can address certain challenges in Indian setting. More importantly, founders will learn how to scale up, build a robust tech team and improve customer experience. Meanwhile, incubators and accelerators can benefit by mentoring sessions, strengthening the global connection and internalizing organizational best practices.

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