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70% of start-ups say enterprise tech drives hypergrowth, better valuations

SAP India, in conjunction with Zinnov Digital, released new research demonstrating that implementing a strong digital core on cloud provides increased benefits to Indian start-ups. Surprisingly, over 80% of start-ups in the Enterprise Tech, Health Tech, Retail, and Logistics & AutoTech sectors have reported considerable revenue growth, highlighting the enormous positive influence of enterprise applications on start-up performance and success.

Titled ‘Driving the next phase of sustainable growth for Indian Start-ups in 2023 and beyond,’ the study of 115 startups also suggests that start-ups will continue to invest in enterprise technology platforms, driven by their proven ability to deliver business outcomes and ROI. Some of the key benefits of enterprise applications include top-line acceleration and control on the bottom-line, quick revenue recognition and handling complex billing based on contracts and consumption for differentiated service lines.

Announcing the findings of the survey, Sanket Deodhar, Vice President- Digital Natives and Startups, SAP India said, “Indian start-ups today require adequate tech infrastructure to help them diversifying business, scaling up operations and acquisition and retention of the right talent. Mission-critical Enterprise Resource Planning (ERP) systems on cloud are powerful enablers that provide valuable insights and direction to navigate any challenges, and accomplish their goals, including attracting investors, fair valuations and retaining a competitive edge.”

Best-run start-ups run on a modern digital core

  • Technology remains centre stage, influencing how startups grow sustainably.
  • ~74% of Start-ups in India have reported direct benefits from implementing enterprise applications.
  • 24% of Start-ups believe that achieving maturity in their business model, driven by robust technological capabilities and scalable operations, plays a crucial role in attracting investors.
  • About 68% of respondents reported a strong growth in revenue, after adopting enterprise technology solutions, leading to an increase in their valuations.

Enterprise tech on the cloud is the future enabler

  • Start-ups will continue to prioritise enterprise technology as a critical aspect of their investment to navigate the next phase of growth and development.
  • 37% of the start-ups plan to increase their spending on enterprise applications by more than 15% in 2023.
  • 81% of startups cited automation and standardization of processes across divisions with faster customizations as the primary benefit being derived by hosting enterprise applications on the cloud.
  • Adoption across the public cloud is set to grow by 2X whereas the private cloud promises a ~50% increase in adoption indicating a high focus for start-ups to shift their workloads to the cloud.

Addressing Challenges, Indian startups stay resilient

  • Despite the funding winter and dynamic market conditions, Indian startups continue to grow and there is no sign of investments slowing down for high-performing start-ups in the coming years.
  • More than 75% of start-ups point towards metrics such as revenue generated in the past year, product and service margins, and market share based on traction, for determining valuations.
  • 81% of start-ups reported customer sentiment as one of their biggest business concerns, indicating the importance of customer acquisition, experience, and servicing metrics.
  • 70% of respondents noted that Partner evaluation and lack of in-house knowledge to manage remain the top challenges for start-ups while implementing enterprise application solutions.

Commenting on the study, Sidhant Rastogi, Managing Partner at Zinnov Management Consulting, said, “In 2022, Indian start-ups faced significant challenges due to market headwinds and reduced valuations. As we enter 2023, we remain optimistic that investment in the right technology and organizational augmentation can help start-ups navigate the economic slowdown caused by the recession and other macroeconomic factors. By doing so, they can ramp up valuations and revenue and achieve sustained growth.” SME Futures

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