Seed funding for startups fell over 20 percent to $200 million in 2019, according to Nasscom's new startup report, despite the government moving to address concerns around angel tax.
The number of startups added to the ecosystem was also lower compared to last year at 1,100 new startups. Last year, 1,200 startups were added.
Overall, the tech startup ecosystem received $4.4 billion in 2019, up from $ 4.2 billion last year. Early-stage funding in Series A and B increased to $1.6 billion from $1.1 billion, as per the report.
"Angel tax was a big concern over the last few years and it was a welcome move by the government to address it. We expect to see seed-stage funding picking up over the next few years," said Debjani Ghosh, president, Nasscom.
Overall, the total number of tech startups in India founded from 2014-2019 stands at over 9,000. The key highlight in 2019 has been the spike in the number of unicorns. Seven startups became unicorns this year, and Nasscom expects two or three more to be added.
Currently, there are 24 unicorns in India, which puts it only behind the US and China, and there are at least 50 soonicorns, or startups in the pipeline to become unicorns.
Tech startups currently employ 60,000 employees direct jobs, while employing 3x in terms of indirect jobs. Nasscom projects that by 2025, startups will have over 1 million direct jobs by 2025 and 4 million indirect jobs. It also projects over 100 unicorns by 2025 and the valuation of the startup ecosystem to increase to over $350 billion by 2025.
However, larger concerns for startups around access to markets and funding still remain, Ghosh said, and added that the government needed to support startups more through policies and easier accessibility to government tenders.