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Which are the high-growth sectors in the startup space?

 

Startups have captivated the globe, and the Indian startup landscape is no exception. It has been growing at a rapid pace year after year, with no signs of slowing down anytime soon.

According to reports,

India has the 3rd largest startup ecosystem in the world; expected to witness YoY growth of a consistent annual growth of 12-15%. India has about 50,000 startups in India in 2018; around 8,900 – 9,300 of these are technology led startups 1300 new tech startups were born in 2019 alone implying there are 2-3 tech startups born every day.”

It cannot be ignored that the COVID-19 pandemic had disastrous ramifications in the startup and MSME sectors. These are reliant on a steady flow of finance and investments, which came to a halt owing to the outbreak.

However, the pandemic has brought with it new chances for several entrepreneurial industries. There is now an opportunity to enter a previously untapped market.

Let’s look at some of the industries that would benefit from their business model:

i) Healthcare

With a global health emergency at hand, the health and wellness industry has a big chance to establish itself as a priority among users. This industry is already on its way to becoming the one with the biggest development prospects in the future, having established itself as a critical and much-needed support system.

The Indian Healthcare Industry, which includes enterprises that provide clinical services, produce medications, and supply medical equipment, as well as healthcare-related support services such as medical insurance, is one of India’s major industries in terms of income and employment.

When it comes to industrial growth, India’s healthcare industry is increasing at a CAGR of 16–17 %. The rising demand for preventative, curative, rehabilitative, and palliative care supports this predicted growth rate.

India also has a lot to offer in terms of Research & development and medical tourism. Before the COVID-19 outbreak, medical tourism in India was predicted to reach $9 billion by 2020, up from $3 billion in 2015.

ii) EdTech

When schools and educational institutions are unable to operate, online education, tutoring, and web courses have become indispensable. The online education industry, which is irreplaceable, is seeing a dramatic increase, and individuals from all sorts of backgrounds, from all of the COVID-19 impacted countries, are seeking alternatives to traditional teaching and learning.

The EdTech business in India is predicted to grow to $30 billion in the next 10 years, fueled by rising smartphone usage and a move to digital-learning methods. The sector has previously gained a lot of traction, but since the COVID outbreak, the EdTech business has grown exponentially.

According to RedSeer Report 2019-20,

“By 2022, online education offerings across grades 1 to 12 are projected to increase 6.3 times to create a $ 1.7 BN market, while the Post-K12 market is set to grow 3.7 times to create a $ 1.8 BN market. This is going to create meaningful opportunity for incumbent players as well as space for multiple new startups.”

Source: Omidyar Network India – RedSeer Report 2019-20

After China and the United States, India has emerged as one of the top three nations in the world for EdTech venture capital financing. In the year 2020, $ 2.1 billion was invested in India’s EdTech sector.

iii) Fintech

Companies that provide Wealth Management, Digital Lending, and Digital Payment services constitute the fintech industry.

The year 2016 contributed to the growth of the industry, as the government implemented the Demonetization Drive in November of the same year, banning the INR 500 and INR 1,000 currencies. Also, because of Reliance Jio’s digital revolution, India’s Fintech sector has grown at an exponential rate.

India has also emerged as a Fintech Industry Leader, with the highest FinTech Adoption Rate of 87%(EY Global Fintech Adoption Index 2019), as government programmes like Digital India, which emphasises a digitally empowered population.

Until 2023, digital payments are predicted to expand at a CAGR of 20%, as the internet penetration rate is growing, so is the usage of digital payment methods.

Investors are prepared to invest in Fintech startups. Also, banks and businesses are increasing their investments in technology-based financial solutions.

iv) Software-as-a-Service (SaaS)

In today’s circumstances, SaaS and Remote Working Tools are a sure bet for success. With the upcoming technological changes, SaaS apps and Remote Working Tools will help to facilitate existing initiatives and prepare the way for future undertakings to a larger level.

These apps would be the foundations for the majority of future company processes, as well as a safe harbour for current ones. These would aid position or in the transition to a better stance for several companies across the world by supporting the need of the hour while emphasising the present work culture to improve productivity.

Many MSMEs (micro, small, and medium companies) have adopted the use of software to increase work productivity.

The Indian SaaS environment is on the verge of revolution and has developed to a worth billions of dollars business, thanks to the growing MSME ecosystem that requires software to function.

Zenoti, Zoho, Freshworks, Druva, and Icertis are SaaS-based Indian businesses to achieve unicorn status.

The Indian market is yet unexplored, and researchers predict that the SaaS business in India would develop at a rate of 36% each year.

v) HR Tech

The success of every firm is directly proportional to the success of its personnel. In today’s fast-paced corporate world, if an employee does not change, they will not progress.

Nothing is more vital than employing and developing the appropriate team to deliver long-term business development. As a result, HR specialists are critical to every company’s success. HR professionals must be on top of their game to make informed judgments.

HR technology helps HR managers to foster a positive work environment and bring out the best in each employee.

The HR Technology sector is predicted to reach $34 billion by 2021, according to research by People Matters. Furthermore, Asia, especially India, is estimated to account for about $3.6 billion of that industry. The demand for improved HR Tech products will only grow as the requirement for accurate and effective recruiting strategies grows.

vi) E-commerce

With national lockdowns in place in many countries, social distancing becoming the new normal and people staying away from markets, food shops, and public spaces, the E-commerce and delivery-based industries are thriving. These provide a secure and remote means to obtain both vital and non-essential items. The sector is expected to experience an increase in customer-retail activities as a result of this.

The retail business is expected to grow at a CAGR of 5.3 % to $31,880.8 billion by 2023. This rate of growth presents a golden opportunity for retail technology businesses. Retail’s future, like that of other businesses, is dependent on a tech-driven strategy.

vii) OTT & Gaming

OTT and online gaming have replaced the traditional ways of entertainment  With movie theatres, gaming centres, and other recreational-amusement establishments being banned or restricted, these OTT platforms and the online gaming sector had to fill in the gaps.

Those who were not used to them would soon become adapted to them, and the necessity to go out for amusement might be supplanted by them. These have proven to be time and cost-effective, as well as providing a more personalised version of the same experience that can be enjoyed from the comfort of one’s own home.

In the startup ecosystem, India seems to be on its path to hitting incredible heights. We may assume that the pandemic has halted startup growth, but it has also resulted in a significant demand for numerous other services in India’s startup industries, such as EdTech and Health Tech. The rise of India’s startup environment will inevitably follow.

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References:

https://www.mckinsey.com/featured-insights/leadership/the-next-normal-arrives-trends-that-will-define-2021-and-beyond

https://www.inc.com/best-industries-2020.html

https://www.embroker.com/blog/unicorn-startups/

https://www.startupindia.gov.in/content/sih/en/reources/startup_india_notes/industry_insights/top_8_startup_sectors_likely_to_grow_post_COVID-19_pandemic.html

https://advisor.visualcapitalist.com/the-5-fastest-growing-industries-of-the-next-decade/

https://www.linkedin.com/pulse/16-fastest-growing-industries-future-2021-debiprasad-bandopadhyay/

https://www.businessinsider.in/business/startups/news/2021-will-be-a-watershed-moment-for-india-tech-ecosystem-here-are-the-startup-sectors-that-vcs-are-betting-on/articleshow/80208631.cms

https://timesofindia.indiatimes.com/business/india-business/overheated-startup-sectors-may-see-a-reset/articleshow/80020583.cms

https://thestartuplab.in/growth-story-of-indian-startup-ecosystem-and-top-5-most-promising-sectors-in-2021/

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