Over 60 pc tech start-ups saw profits rise in 2023

Chennai: Notwithstanding the funding winter, over 60 per cent of tech start-ups reported an increase in profitability in 2023. With Generative AI acceleration, 70 per cent of start-up founders are intending to embed Artificial Intelligence in their solutions, finds NASSCOM.

Funding value in 2023 stood at $6 billion, down 67 per cent over the last year and deal volumes at 824 were down by 48 per cent. After a peak in investments in 2021, the recent economic slowdown has  made founders take a more cautious approach, and shift their focus from fundraising to cost optimization and profitability.

Around 46 per cent of tech start-ups reported increase in revenues by over 20 per cent while another 13 per cent saw less than 20 per cent improvement in 2023. Nearly 41 per cent of the funded tech start-up founders reported significant improvement in profits and another 18 per cent saw moderate improvement.

Around 59 per cent of the tech start-ups reported utilizing DeepTech to improve efficiency in the organization and 52 per cent of the tech start-ups reported leveraging DeepTech to reduce operational costs. Another 41 per cent of the tech start-ups reported automating internal processes using DeepTech. Industrial and manufacturing sector witnessed a 2.5X increase in funding share led by DeepTech-infused solutions.

Further, 70 per cent of tech start-ups reported pursuing Generative AI to embed it into their existing products and 45 per cent of them reported pursuing Generative AI for knowledge assistants.

Indian tech start-ups have raised over $70 billion in funding since 2019. Over 950 tech start-ups were founded in 2023. Of this, ed-tech accounted for 16 per cent, enterprise tech for 12 per cent and BFSI 10 per cent. This has made India a home to over 31,000 tech start-ups and 91 unicorns. India’s tech start-up ecosystem ranks third globally and it has the last number of science and technology, engineering and mathematics (STEM) graduates at 2530,000.