Nandini Mansinghka

The author is CEO of Mumbai Angels Network

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Sunrise Sectors To Look Out For Investors In 2023

Riding on the precautions exercised through the year that has gone by, a beeline of investors scrambling to identify the sweet spot of investments in promising sectors is a near-term certainty. Read the insightful article to find out the shining sectors of 2023

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Sunrise Sectors To Look Out For Investors In 2023
Sunrise Sectors To Look Out For Investors In 2023

While India firmly placed itself in the elite top three of startup ecosystems across the globe, funding for startups in 2022 doubled compared to the pre-pandemic phase, amidst fears of a global slowdown. According to the PWC report, the startups in India raised USD 24 billion in calendar year (CY) 2022 compared to USD 12.8 billion in 2019. The investment spurts in certain sectors essentially debunked the funding winter sentiments and reflected enormous investor confidence in the unique startup solutions. Here is a glimpse of some of the extraordinary performances through the year.

Sustainable Solutions

With the hurdles of technology and market acceptance risk already crossed over, and the conducive push by the Government of India for attaining its ambitious 2030 RE and non-fossil capacity targets, India is a lucrative market for investments in sustainable solutions ranging from solar to EV for climate investors. There has been an incredible surge in global investor interest for setting up dedicated funds, or for scaling up strategic investments in this space. The investments in the climate-tech sector have more than doubled in 2022, with around 143 climate-tech startups securing USD 2.2 billion in funding compared to 172 startups securing approximately USD 850 million in 2021.

AgrifoodTech Solutions

According to the India AgriFoodTech Investment Report 2022, the Agrifood tech startups in India received record-breaking funding in 2022 to the tune of USD 4.6 billion in 230 deals that represented 119 per cent growth over investments in 2021. The growth in downstream investments which includes Restaurant and eGrocery startups, stood at 115 per cent while the upstream startups responsible for innovation closer to the farm clocked a leap of 185 per cent in investments compared to 2021. 

As an agrarian economy, sustained growth in this space is of paramount importance for India in derailing the cascading impact of global slowdown. Today, the phenomenal growth momentum in this space places India as one of the biggest agrifood tech markets globally besides China, Singapore, and Indonesia, and this is likely to sustain investor confidence amidst conducive governmental reforms and the fast-paced digital penetration into deeper rural India.

EnterpriseTech and DeepTech Solutions

The DeepTech startup base in India is growing at about 40 per cent CAGR over 4 years (Nasscom). The rising penetration of DeepTech across verticals such as Enterprise, HealthTech, FinTech, and Industrial and Manufacturing coupled with increasing investor preference for DeepTech solutions, such as the recent launch of Digital India Innovation Fund by the Union Government in support of DeepTech startups, etc. stands promising for an accelerated growth prospect in the future.   

SpaceTech Solutions

The year 2022 was a historic year of accomplishments for the Indian space industry that marked the first-of-its-kind private rocket launch and other multiple satellite launches. Private participation in the SpaceTech space is increasingly gaining momentum with the government of India driving the agenda with favorable policies. The leading SpaceTech startups received more than USD 110 million in funding in CY2022 compared to the USD 68 Mn received in the year 2021. With the proposed rollout of new Indian Space policy, accelerated thrust on satellite manufacturing, and Space parks and field parks, the Space economy in India is now set for accelerated growth.

A growing FDI influx 

According to the Ministry of Commerce and Industry, India received the highest-ever foreign inflows in 2022. With an influx of a whopping USD 84.8 billion of Foreign Direct Investment (FDI) from 101 countries spanning 57 sectors, the FDI in sectors such as IT (Software and Hardware) and automobile (Collectively attracted more than 50 per cent of the total FDI), defense manufacturing, SaaS, renewable energy, Insurance, etc. were notable. The incessant government reforms and policies over the years have been instrumental in positioning India as one of the promising investment destinations globally, and the prospect of attracting significant FDI in the future stands high and tall irrespective of the current obscurity over the investment scenario.

Riding on the precautions exercised through the year that has gone by, a beeline of investors scrambling to identify the sweet spot of investments in promising sectors is a near-term certainty. The year 2022 was a watershed year of merger and acquisition deals that saw the numbers soar to 1,185 garnering approximately USD 126 billion compared to USD 52.31 billion in 2021. As the momentum of collaborations across geographies and value chains for sustained growth through value creation continues to pick up pace, the year 2023 is expected to usher in growth impetus through synergies across dimensions.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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