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Pandemic Impact Analysis for Start-ups

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Pandemic Impact Analysis for Start-ups

It will be a repeat to say that pandemic has severely affected almost every start-up vertical in some-way or the other. But if we deeply analyze, it doesn’t look that simple. The overall impact could be positive or negative but there are various parameters that actually reflect the true picture of that vertical.

To clearly understand the impact of a pandemic on the start-up verticals, we analyzed all these verticals on different parameters like expected recovery time, digital readiness, consumer behaviours, business model, funding impact, valuation impact, employment impact and market impact.

The whole analysis is divided into 3 parts:

  • Positive Impact: The sectors receiving high funding, soaring valuation, in line with market needs and digital-ready for future
  • Medium Impact: The sectors receiving funding, recovering quickly, expanding market share, and with bullish future
  • Negative Impact: The ones with below-par funding, stressed valuations, sluggish customer demand, and with an extended recovery period

If you look at the above image, the clear exceptions of this pandemic are Edtech, Enterprise Tech, Gaming, Fintech, HealthTech, and FoodTech. And the success of these sectors during COVID-19 is directly related to the “Work from Home”. More than the pandemic what has actually driven these markets is “work from home”. From education to office work, from cooking to playing games on phone; all these activities spurted during the lockdown. Numbers also confirm the same:

Healthtech: 2.2X Growth witnessed by tele-medicine / tele-consultation platforms

Edtech: 1.9X growth in the number of registered users across major EdTech platforms during the lockdown

Fintech: 75% of UPI payments are through FinTechs1; UPI payments have grown 70% since Feb 2020

Gaming: 1.6X Estimated Revenue Growth of Gaming Segment from FY 20 to FY 22

Cybersecurity: Growth in Revenue of Indian Cybersecurity Product Companies from 2019

Certain sectors managed to ditch the mayhem of pandemic and have a neutral impact. Sectors like Media & Entertainment, RetailTech, Agritech, Professional Services, etc. continued their momentum with marginal growth. These sectors are expected to be the first ones to show substantial growth once pandemic settles down.

Agritech: 2.5X Surge in demand for fresh produce via AgriTech start-ups

Media & Entertainment: 325 mn estimated number of Indians streaming audio/video content online daily

Now there are certain sectors which got severely impacted due to pandemic like Travel & Hospitality, Energy & Utilities, Automotive, Industrial & Manufacturing, Real Estate Tech, Mobility, SCM Logistics, and Professional Services. These sectors faced a lot of difficulty in the initial 6 months of the pandemic but as the lockdown restrictions are eased, a constant sign of recovery is visible in these sectors. It is expected that many of these sectors will reach Pre COVID levels once the vaccination distribution scale-up and market stabilizes.

Start-ups vertical reacted differently to the pandemic but overall the ecosystem is back in place and on a strong road to recovery. Based on the risk index some sector might take time to reach Pre COVID level but the rebound is fast, strong, and sustainable.

Please read more details in our recently released report “Indian Tech Start-up Ecosystem – On the March to a Trillion Dollar Digital Economy

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