Over the past few months, Web3 has become a buzzword with technological concepts, such as metaverse and NFTs, gaining prominence. This new generation of the web is expected to bring new avenues for websites and applications that are based on the utility offered by blockchain technology. The National Association of Software and Services Companies (NASSCOM) has today released a joint study with Hashed Emergent on the side lines of the NASSCOM Product Conclave 2022 (NPC 2022). The study, titled, “The India Web3 Startup Landscape, An Emerging Technology Leadership Frontier,” has been prepared in research partnership with Zinnov Consulting. The report is a first-of-its-kind study aimed at promoting a broader understanding of the diverse possibilities with Web3 and the landscape of Web3 startups in the country.
India’s promising Web3 Potential
While global response to Web3 is still shaping up, India’s growing economy, demographic dividend, and exponential adoption of emerging technologies, across sectors, position the country to become one of the highest growth markets for Web3 globally. In the last two years, Indian Web3 startups have grown to a 450+ community, with 4 unicorns, raising $1.3 billion of total investments, until April 2022. Between 2021-2022 alone, India registered over 170 new Web3 startups, yielding over 50% CAGR growth since 2015. With increasing confidence and interest from global investors, investments in Indian Web3 and Web 2.5 startups has also soared. The sector has witnessed robust funding across stages. New age incubators have pooled in over $587 million funding, as of Q32021.
India’s Web3 talent advantage
Currently, India is home to over 11% of the global Web3 talent, making the country the 3rd largest Web3 talent pool globally. While the global demand for blockchain specialists and developers surges, India’s existing, and fastest growing digital talent pool has incumbent advantages when it comes to expertise development, quick reskilling, and bridging the Web3 demand-supply gap. Further, this talent pool is expected to grow by over 120% in the next 1-2 years. Today, nearly 75,000 blockchain professionals are actively employed by the tech industry in India. Active collaboration between academia, startups, and corporates, and increasing number of blockchain-related government initiatives, will play a crucial role in driving the Web3 talent growth in the country.
Debjani, President, NASSCOM said, “India’s rapid adoption of new-age technologies, its growing startup ecosystem, and large scale digitally skilled talent potential is cementing the country’s position in the global Web3 landscape. It is heartening to see that industry and government stakeholders in India are taking a very pragmatic approach towards blockchain tech with use-cases being explored in areas ranging from health & safety, finance, enterprise tech, and land registry, to education. While we are only scratching the surface when it comes to emerging tech such as Web3, the Techade will be all about the technology making significant advances leading to innovative use-cases and magnified positive impact at a grassroots level.”
Tak Lee, CEO & Managing Partner, Hashed Emergent said, “The technology underpinning Web3 has created a whitespace for innovation across domains and geographies. In order to fully understand and grasp the significance of the opportunity at hand, India must develop public awareness about this innovative technology, and the use cases and benefits it offers.”
India’s diversifying Web3 startup landscape
In terms of distribution, over 80% of Indian Web3 startups are in tier I cities. However, the tier II/III ecosystem is growing rapidly with locations such as Jaipur, Vadodara, Ahmedabad, Kolkata, Trivandrum, and Coimbatore evolving as emerging hubs for Web3 startups. The sector has also seen a burgeoning product ecosystem, delivering global products from India to the world. Over 60% of the Indian Web3 startups have already expanded their footprint outside India with HQs spread across the world. However, these startups have built their largest Web3 talent teams in India, thereby putting India on the global map for Web3 solutions from India for the world.
This surge in Web3 startups has driven up the adoption of blockchain. Startups focused on other emerging technologies are building solutions for on-chain consumption. Further, a group of startups is focusing on building solutions that integrate Web 2.0 features with Web3 features based on market need, called “Web 2.5 solutions,” for mass adoption, ease-of-access, and better product-market fit. Majority of the Web3 startups in India are focused on building consumer-facing applications in the areas of decentralized finance (DeFi) and Entertainment (gaming, NFT marketplaces, Metaverse). Decentralized communities, based on on-chain coordination mechanisms, are coming up.
Opportunities for Web3 Startups in India
The blockchain-based version of the web, with its secure and immutable record-keeping and disintermediation, stands to provide benefits for a variety of sectors. Web3 and blockchain will prove game-changing for economies that can bring together the right ecosystem partners to take the right steps early on to facilitate this industry – co-creating solutions & building marketplaces, focusing on blockchain education from early stages of STEM education, building quick-turnaround certification programs, aggressively promoting cutting-edge R&D, and importantly, creating forward-looking policies and regulations through constructive dialogues to promote India’s Web3 potential.