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Beyond the Funding Winter: 2023 for Start-ups in the Indian Automotive Sector
Beyond the Funding Winter: 2023 for Start-ups in the Indian Automotive Sector

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In my previous blogs, we saw how start-ups in the Indian SCM& Logistics, and Industrial & Manufacturing sectors managed to withstand strong headwinds in 2023. The third sector which emerged the strongest of all was Automotive.While all other sectors grappled with a decline in funding, tech start-ups in the automotive industry experienced a notable surge, not just in their share in the overall start-up funding, but also in the value of funding raised.

Source: nasscom-Zinnov Weathering The Challenges: The Indian Tech Start-Up Landscape Report 2023

Much of this funding was attributable to growth in mega deal value, primarily across the Electric Vehicle (EV) segment. According to the nasscom-Zinnov report, the sector saw a 57% increase in mega deal value, most of which was raised by EV manufacturers. Start-ups in this sector also saw a 25% jump in early and late-stage funding, which indicates a gradual shift towards maturity. A fair share of this success should be accredited to the governments which have been providing substantial support and catalysing the sector's growth. Beyond financial incentives, government initiatives serve as a guiding force, creating an environment conducive to innovation and sustainable practices. Policies such as Income tax exemption, GST reduction, PLI Scheme, and state EV policies among others are drivingboth innovation, and the adoption of sustainable mobility, which is translating into a heavier flow of funding.

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Source: nasscom-Zinnov Weathering The Challenges: The Indian Tech Start-Up Landscape Report 2023

Since innovations in this sector align well with government’s sustainability targets, automakers are experiencing an environment which is favourable for the big shifts. According to the nasscom-Zinnov report, after witnessing a 3X increase between 2020 and 2023, EV sales in India are poised to grow by 45% by 2030. Although the space is evolving rapidly, start-ups are showing agility and harnessing the currents of change for transformative journeys. The fact that they managed to emerge stronger from the funding winter of 2023, indicates that start-ups with agility, and focus on addressing some major real-world challenges will continue to thrive.What is required more is inventive spirit and strategic vision to foresee and navigate uncertainties in times to come.


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Dhiraj Sharma
Principal Analyst

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