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Top five sectors that took center stage in India this year | KrASIA Year in Review

Written by Moulishree Srivastava Published on   8 mins read

The investors who KrASIA spoke with said, in the hindsight, there has never been a better year for tech startups than 2020.

For the Indian startup ecosystem, 2020 has been the year of reflection, resilience, and reset.

The first half saw businesses come to a screeching halt as the nation-wide lockdown imposed to curb the spread of COVID-19 restricted the movement of people and goods. In the second half of the year, the tension between India and China over the border issue worsened, leading the former to change its FDI regulations making it difficult for Chinese investors to invest in the country. This was followed by multiple bans on Chinese apps.

As much as this year has brought struggles pertaining to health and wealth, a few cracks in the wall gave way to light and positivity.

Even as the funding dried up initially in the world’s third-largest startup ecosystem, Reliance Jio, the one-year-old digital venture of Mukesh Ambani, Asia’s richest person, raised over USD 20 billion from global investors in the middle of the pandemic, boosting the investor confidence.

When raising capital from China became almost impossible, major American and Indian VC firms including Sequoia Capital, Lightspeed Venture Partners, and 3One4 announced their new funds to tap emerging opportunities. Furthermore, over 20 overseas investors made their first few bets in India during the year, according to Venture Intelligence data.

Meanwhile, the government kicked off the drive to become ‘Atmanirbhar’ or self-sufficient, a move evidently aimed at reducing the dependence on Chinese hardware and software. To that extent, the ban on Chinese apps gave an opportunity to homegrown startups, specifically in gaming and short-video space.

Amidst all this, the biggest up-side of the pandemic was that millions of new users adopted online services as people preferred to stay indoors.

With rising digital adoption, funding activity also picked up. When online festive sales started in October, consumer spending came back roaring, and online commerce in the country not only rebounded but also boomed.

Now that 2020 is coming to a close, KrASIA took a look at the sectors that took the center stage and shined brightly.

Online education

As India went under a nation-wide lockdown earlier this year impacting about 320 million school and college students, the demand for online education shot through the roof. While the sector had begun seeing investors’ sentiments shift in its favor beginning last year, edtech unlocked its true potential in 2020.

When major edtech firms, in their bid to help students and schools, offered them free content for a couple of months, their traffic spiked. Realizing, this rise in user-base was not a temporary event, investors sought to have a share of the pie.

According to Venture Intelligence, 53 education technology companies raised USD 1.9 billion between January and November 2020. While Byju’s, the world’s most valued edtech startup secured over USD 1 billion in funding this year, rival Unacademy attracted USD 250 million and became SoftBank’s first edtech bet in India. Lesser known, but the country’s third most valued Coursera-like edtech startup Eruditus landed a USD 113 million check from Chan Zuckerberg Initiative, Naspers, and Sequoia Capital.

Flushed with money, the bigger players began gobbling up smaller edtech platforms to maintain their dominance and enter new verticals. For instance, Byju’s acquired two edtech firms including WhiteHatJr, a coding tutoring platform, for a whopping USD 300 million in August. Unacademy, on its part, acquired five smaller players to strengthen its offering in the competitive examination space.

The VCs who KrASIA spoke with, believe investor interest will remain in the booming space, although the capital may flow into specific, niche verticals as opposed to bigger, established categories like K-12 or test prep. However, some believe that, with almost USD 2 billion invested, the sector might be a bubble in making.


The year 2020 brought much-needed action into the Indian gaming space that catapulted it to one of the most sought after sectors among VCs. In March, when the world’s second-most-populous country imposed the two-month-long nationwide lockdown, gaming startups saw a sudden spike in users. Fortunately, this wasn’t just a short term boost. As millions of Gen Z and millennials remained stuck at home during the better part of the year despite the relaxation in lockdown, the gaming companies saw a remarkable increase in users who got hooked on to gaming throughout the year.

According to Sensor Tower data, India witnessed 7.3 billion game downloads in the first three quarters of 2020, almost 70% more than what the country registered in the corresponding period last year. India ended up contributing 17% to global game installs, with the US being the distant second, contributing to 9.5% of the total downloads. The game downloads ballooned to 8.8 billion by November 23, way more than 5.9 billion game downloads in 2019.

That the gaming sector was on the rising streak didn’t escape the investors, who poured in USD 336 million in 10 startups between January and November. The top deals in the space include fantasy sports platform Dream 11 raising USD 225 million and e-sports company Mobile Premier League securing USD 90 million. Both of them raised money in September, just in time for the 13th edition of Indian Premier League, a two-month-long popular cricketing tournament, which gave a leg up to fantasy sports. Earlier this year, India’s first gaming-focused VC Lumikai launched its maiden fund to back 20 early-stage companies over the next 18 months.

Moreover, oil-to-internet conglomerate Reliance and Walmart-owned e-tailer Flipkart also jumped into the fray by acquiring AR gaming startup Krikey and social gaming platform Mech Mocha, respectively. Investors who spoke with KrASIA concur that gaming has scaled to a different level this year.

Florian Olivo for Unsplash

Enterprise tech, SaaS 

Enterprise tech and SaaS remained an all-time favorite of the VCs who KrASIA spoke with.

That’s partly because most enterprise tech and SaaS startups have been more resilient than consumer-facing firms. Even as businesses shut shop due to the nationwide lockdown, many of these B2B companies had recurring revenues to fall back on. By mid-year, as the pandemic forced millions of businesses, small merchants, and micropreneurs to conduct operations online, the enterprise tech and SaaS companies witnessed a surge in demand.

VCs had been waiting for this revolution to happen for a while. In May, while the country was under lockdown and investors were barely writing any checks, digital ledger app Khatabook, landed a USD 60 million funding from B Capital Group. The next month, Postman, an Indian SaaS startup that helps businesses build and test their application programming interfaces, became the country’s fourth SaaS unicorn after raising USD 150 million in its Series C round.

A DealStreetAsia report citing Tracxn data said between January and October, SaaS and digital apps (like Khatabook) raised a total of USD 2.1 billion. Earlier this week, cloud-based salon and spa management platform Zenoti entered the unicorn club after raising USD 160 million.

“SaaS has gotten much more attention than before and there are now more companies thinking global,” GV Ravishankar, managing director at Sequoia Capital India told KrASIA. “We are starting to see some of our own companies like Freshworks be more successful, building large global businesses out of India, and serving as inspiration for other people to follow.”

While the existing startup got a boost with businesses adopting digital solutions and working remotely, new solutions are also coming up, believes Utsav Somani, partner at AngelList, a US-based digital marketplace that primarily connects angel investors with tech startups for early-stage deals.

“A lot of people leaving Zoho and Freshworks are starting great companies, and we will see a lot of new white spaces being created,” he said.  “The era of horizontal and vertical SaaS is very exciting for the next decade, coming out from India.”

Healthtech and wellness

E-pharmacy was one of the sectors that benefited during the lockdown as it came under the ‘essentials category’ which was allowed to be open for business.

Healthtech and wellness firms providing online consultations or solutions to manage chronic diseases saw a surge in user traction and engagement in the months ensuing the lockdown. COVID-19 also made consumers, especially in bigger cities, more open to spending on food and beverages that increase immunity.

It comes as no surprise that VCs began looking at health tech startups turning the crisis into opportunity. The Venture Intelligence data shows investors pumped USD 517 million in 53 healthcare companies till November this year. VCs wrote checks for not only existing bigger players like fitness and wellness firm CureFit or online medicine platform PharmEasy but also newer startups like Habbit Health and Fitspire, both of which offer a range of health and wellness products. In Q2 2020, right in the middle of the lockdown, the country saw nine angel or seed-stage deals in health-tech as compared to three deals in the previous quarter.

“Health and wellness is the growth sector of the future. The COVID-19 pandemic has made everyone realize that nutrition is a must-have and not just for those who work-out,” said AngelList’s Somani.

Anirudh Damani, managing partner of VC firm, Artha Venture Fund, concurs with Somani and believes health tech firms, as well as consumer health brands, would do well.

“The mood of the public today and for a long time to come will be (focused) on immunity. For that, good health-brands are important, whether it is a consumer brand or a health tech service,” Damani told KrASIA.

Source: Shutterstock

Short video apps

If there was one category that emerged and shot to fame in the same year, it would be none other than short video apps. Till about late last year, no one had imagined the dream run of Chinese short video and social media apps would be cut short.

As the tension between India and China rose, beginning June, the Indian government announced multiple rounds of bans on Chinese apps including globally popular short video app TikTok. All of a sudden, TikTok’s 200 million user base was up for grabs.

Dozens of homegrown apps rushed to claim the title of best TikTok alternative, while global giants including Triller, Snapchat, and Instagram’s Reels doubled down on the Indian market. Following the TikTok ban, many of these apps saw a sharp spike in users to such an extent that they had a hard time maintaining their backends which were initially not well equipped to handle huge traffic. Investors saw it as a lucrative opportunity and pumped in money in short video apps like Mitron, Moj, and Chingari.

However, as the initial buzz around the sector died down, most of these startups shifted the focus from wooing users to retaining them, monetizing their platform, and building a sustainable business.

“There was a lot of activity that happened when the first app ban happened. It gave them a short term boost,” said Somani. “But to build a proper startup with real revenues takes time.”

Investors KrASIA spoke with feel that while the sector caught the fancy of VCs this year, that may not be the case in 2021, and only those platforms that can engage and retain users, in the long run, would survive and thrive.


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