The year 2021 has been an important year, as we have seen the trends and changes in behavior – which were initiated in 2020 – consolidate both at the organizational and individual level. It has been a year of resilience, innovation and trend setting for the decade to come, as we have seen over 43 Indian startups become part of the coveted Unicorn Club. Indian startups saw a total injection of over $ 36 billion (a 200% jump from 2020) and an option to exit IPOs finally closing, with the successful listing of Zomato. It was a year of maturation for the Indian start-up ecosystem. Additionally, a year in which nearly every industry has captured the attention of investors and the public, although technology is the underlying factor. But some sectors that stood out were fintech, consumer (mainly driven by D2C brands), SaaS, and games.
Trends to watch in 2022
1. Consolidation of capital: One of the defining trends that started in 2021 has been the consolidation of capital between particular sectors, start-ups and stages of start-ups. Many late stage start-ups have seen multiple turns, even after the unicorn ride. CRED, Meesho, Razorpay have seen their already huge valuations jump three to four times in a single year. We have also seen the advent of pre-IPO funds in India, with the capital primarily used to drive inorganic growth through acquisitions and marketing. This trend could continue and we could see the gap between heavily funded and unfunded start-ups widen if liquidity decreases.
2. Customer loyalty becomes the key: A lot of funding has been used for inorganic growth, to acquire customers. Now that customers are onboard, it will become imperative for businesses to focus on building loyalty through feedback loops and multiple points of engagement. Therefore, we could see supply chain innovations in the same effort.
3. Web 3.0: Cryptocurrency and blockchain have grown in importance globally with two Indian cryptocurrency exchange start-ups achieving unicorn status in 2021. We could see clearer regulations from the RBI and government and see their own digital currency, making the next six to 12 months crucial for Web 3.0.
4. Sustainability and climate change: The Covid-19 has sounded the alarm on the importance of sustainability. Government and business have started to work on reducing the carbon footprint and providing clean solutions. A remarkable breakthrough has been the multitude of electric vehicle (EV) start-ups like Lohum and Ola Electric that have emerged. With sufficient support, 2022 could be a pivotal year for electric vehicle start-ups.
5. Venture capital debt and alternative financing: Venture capital debt in India has had a bumper year, with startups raising more than $ 600 million, more than double the previous annual record of $ 300 million in 2019. as no / less dilution of equity, flexible terms, supplier programs, etc. With Indian start-ups maturing, planning for international expansion, and seeking to acquire, subprime debt players could become the go-to partner for all start-up debt needs.
(Ishpreet Singh Gandhi is Founder and Managing Partner of Stride Ventures)