The rapid digitalisation of business process across sectors in India has opened up a huge, exploitable market for Indian business-to-business (B2B) technology firms. No wonder then that a recent survey by management consulting firm Zinnov and cloud data services firm NetApp shows that the number of B2B technology startups have surged in India over the last five years (2014-2018).
According to the report released this week, B2B tech startups in the country have more than tripled from 900 in 2014 to over 3200 in 2018. This over three-fold rise in their number has been driven primarily by the huge investments being made by companies in diverse sectors: from financial institutions and hospitals to government and small businesses. This spending toward digitalisation hit $3.7 billion in 2018, rising 364 per cent from 2014.
Sanjay Nath, co-founder and managing partner at Blume Ventures says this is just the beginning and business sector-oriented technology companies will only continue to grow in number. Startups, in fact, might have an easier time building businesses in the B2B sector that catering to end consumers. “Corporates are more open to collaboration with startups, VC firms are more interested in the B2B startup world, and technologies like AI and IoT have proliferated faster into the B2B ecosystem, compared to B2C. This holy combination of corporate support, B2B focused VC funds, and rise of advanced technologies will drive the wave forward,” said Nath.
The transitory phase in which businesses find themselves in India leaves a large exploitable market for young firms in the segment. “There has never been a better time to be a technology entrepreneur in India than now. The incredible rise in the number of B2B startups as a percentage of the total tech startups from 26 per cent in 2014 to 43 per cent in 2018, is a testament to this. Our study found that funding chances increase by 3X after startups graduate from an incubator/accelerator. An intense growth of accelerators and incubators is the much-needed shot in the arm for Indian startups to spread their wings across the length and breadth of the country, encouraging tier 2 and 3 cities to come up,” said Pari Natarajan, Co-Founder and CEO, Zinnov.
The presence of a vibrant accelerator ecosystem in the country is also making things easier for startups. India currently has over 50 accelerators and incubators, operated by both domestic and international tech giants like Cisco, Target, Intel and Swiss Re. 34 per cent of these accelerators are run by Indian firms.
As for geographical distribution, Bengaluru accounts for the most number of B2B startups, followed by Delhi NCR and Mumbai. These three together host around 60 per cent of all B2B tech startups in the country. 70 per cent operate in enterprise tech (41 per cent), fintech (19 per cent) and healthtech (9 per cent) segments, the report said.