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The year 2022 won’t be forgotten in a hurry by the tech and startup ecosystem across the world. It began on a great high but gradually came tumbling down and now – barring a varying forecast of time and severity – the world economy is most definitely headed towards a recession, according to experts and economists.
Although the impact of an economic slowdown began reflecting in the form of a funding winter, Indian startups have been more immune to larger, macroeconomic changes.
Here are the top trends from the Indian startup ecosystem that ruled the headlines this year.
Edtech draws ire in India
Edtech did not have the best time this year, at least in India. However, it should also be noted that it fell from great heights after enjoying high valuations and capital flow during the pandemic when online was the only viable mode for learning.
Overall funding in the edtech industry fell by 50 percent in the second quarter of the calendar year, according to a report by PwC. Things took a sharp turn this year when the country’s leading edtech companies like BYJU’S, Unacademy, and Vedantu laid off employees. World’s most valued edtech venture, BYJU’S drew further flak for announcing a partnership with global football star Lionel Messi for its social impact arm Education For All (EFA) shortly after laying off 2500 employees. The startup later explained the deal was inked six months back.
But not all is gloom and doom in the sector. There are many takers in the market who believe the online learning market despite the world gradually moving back to normalcy. YouTube is the latest entrant to the market with its newly announced ‘Courses’ feature.
Steady rise of SaaS and cloud businesses
The Software-as-a-Service (SaaS) business continued to grow in the face of an economic slowdown with funding in SaaS startups crossing $5 billion this year, according to data research and analysis firm Venture Intelligence. The month November alone saw SaaS startups raising more than $500 million, up by almost five times compared to the same month last year.
Driven by cloud software businesses, the Indian SaaS market is expected to reach a market value of $50 billion by 2030, according to a report titled Rise of the Cloud in India by Bessemer Venture Partners. However, even though investors are optimistic about investing in SaaS enterprises, it does not mean the sector is completely recession-proof, considering a few SaaS startups have announced layoffs and cost-cutting measures.
The big crypto crash
2022 was certainly not a great year for crypto enthusiasts as it fell from euphoric heights the crypto business saw in 2021. Not only has the buzz and talk around crypto quelled, bitcoin and ethereum – the two currencies which usually signal overall health of the industry – saw multiple sharp falls, dipping as much as 71.05 percent and 61.01 percent in values, respectively.
In India, cryptocurrency exchanges were raided by the Directorate General of GST Intelligence (DGGI) over detection of massive tax evasion. However, the biggest controversy is the collapse of the FTX crypto exchange due to the liquidity crisis and its founder Sam Bankman-Fried being involved in what a US prosecutor called a "fraud of epic proportions." While the crypto industry is currently running low on faith and confidence, more regulations are expected to come into the picture in 2023.
More capital for EV and clean energy
Investors have slowly but surely turned to seeing value in startups in the electric vehicle and clean energy space. Even as the tech industry was bracing for a funding slowdown and recession, investors are not shying away from betting on new-age solutions for the world environment.
A report by Entrackr reveals that EV-focussed businesses have attracted over $673 million in funding as of September 2022. The popularity is also showing in consumer choices as well. By August 2022, India saw more than 14 lakh EVs on roads and is likely to have 45 to 50M EVs on road by 2030. In addition to sharp rise in prices of diesel, petrol, and CNG, the government increasing allocation for EV subsidies has also boosted the EV players and stakeholders.
(Stay updated on the latest trends and developments in the Indian private market ecosystem with LEARN. You can also sign up for lessons across angel investing in India)
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