Best Indian Start-ups to invest in 2023

During the course of the previous year, there has a lot of discussion about the Funding winter that start-ups faced globally in the year 2022, owing to various macro-economic issues like the Ukraine-Russia conflict which led to a major hike in inflation, the re-emergence of covid and many other factors.

At the global scale, India is all set to weather the winter funding phenomenon comparatively more easily than most of its global competitors namely the US & China as most top-tier funds have collected more than sufficient amount of funds, an indicator that we might witness intense investment cycles in times to come. As of January 2023, India has emerged as the third largest startup ecosystem globally with over 84,000 Start-ups to invest in India and over 100 unicorns comprising a cumulative net value of over US$ 340Bn, becoming the only 3rd country after US & China to achieve this milestone of possessing 100 unicorns.

India has greatly emphasized improving the Ease of Doing Business in the country by undertaking a slew of reforms. The result has been that over the last couple of years, India has improved its ranking by 23 positions. This, coupled with India’s rise in Logistics Ranking from 54 in 2013 to 38 in 2023. This has made it easier for Micro & Small enterprises to do business in India. Infact, India also entered the Top 50 ranking in the Global Innovation Index which signifies a significant improvement in enabling the most innovative environment.

However, the start-up ecosystem is not devoid of challenges. In Fact, it is facing multiple challenges owing to macroeconomic conditions.

Macro Environment & Indian Start-up Situation:

As RBI keeps increasing interest rates to tame inflation, these hikes would lower the valuation for start-ups and even for those who are financing their requirements using their own equity.

The year 2023 is expected to see start-ups continue their ambitious drive to raise funds in order to expand their businesses. Depreciating the value of rupees will affect their funding plans, especially for those start-ups that have already raised debts in dollars. Debts will also become expensive. Rupee depreciation is expected to further shoot the operational costs of start-ups which might have an impact on their net profits.

The Government & RBI's efforts to reverse rupee depreciation are expected to push VCs to prioritize profitability over growth. This would have an impact on start-ups looking to raise Startup Funding.

Top 3 Unlisted Indian Start-ups of 2022:

1. PharmEasy: Founded in 2015, PharmEasy is an online pharmacy and medical store, specializing in OTC products, diagnostic tests, and medical equipment. During the Covid 19 pandemic, the company became successful by catering to online orders of medicines, and by providing healthcare products at the doorsteps of their customers. PharmEasy became the first health tech. startup to raise 350 Mn$, a significant amount in health tech. industry and be granted a Unicorn status in the healthcare segment. PharmEasy acquired an entire stake in Medlife while the latter acquired 19%+ share in PharmEasy in return.

2. Experiential Etc.: Experiential Etc is an advertising agency, relying on Artificial Intelligence & Machine Learning to enhance their viewer’s experience and help their customers gain traction in the market. It has a very broad global reach and has tied up with multiple top brands, from Amazon Prime, and Disney to Cadbury, Hyundai & Sony. It uses technologies like Holonet, AR Filters, and Live Glass.

3. Madbow Ventures: Madbow Ventures Limited is an Indian e-commerce lifestyle fashion brand that makes creative, distinctive fashion for trendy & contemporary women. They have built business vertical-specific niche websites for specific consumers like slaydeal.com which is very much a deal site on the platform, streetsyletalk.com that have value based fashion products that cater to the masses and stalkbae.com which has premium products with a ticket size of more than Rs.1500 to Rs.2000.

Top 3 Unlisted Indian Start-ups to Invest in 2023:

1. Oyo: Oravel Stays and Private Limited popularly known as Oyo owns and operates an online hotel booking platform called Oyorooms.com. It offers its services under the brand name ‘Oyo Rooms’ with facilities such as AC rooms, Wifi, washroom & television services. It allows users to book a room at an affordable price through its mobile application available on both Android and iOS platforms.

2. Urban Tots: Deepak Houseware & Toys (DH&T), commonly known as Urban Tots is primarily involved in the business of manufacturing & selling toys, ranging from plastic to electronic toys and roll plays. The company’s products are available at retail outlets like Hamleys, FirstCry, & even IOCL Petrol Pump retail outlets, etc. as well on famous e-commerce sites like Amazon.

3. VCI Chemical Industries: VCI Chemicals is involved in the production of specialty chemicals products i.e. Coal Tar Pitch (commonly known as CTP) and high-grade Distillates. The company has a 1.1 Lakh MTPA Coal tar Distillery on 31.1-acre land in Kalinganagar, Orissa. CTP is a key ingredient used in the Aluminium smelter industry. The company aims to substitute 20%-25% of the CTP requirement in the Middle Eastern market which currently relies 100% on Chinese imports.

Looking Forward: 

As India continues to take big leaps across industries in enabling start-ups to introduce sustainable and environment-friendly products to help solve modern-day issues, it is expected to open new avenues for investors and contribute to employment generation as well as the growth of the economy.