These industries still hold promise for startups in 2023

As the Indian startups ecosystem goes through a churning as VCs squeeze funds, certain industries such as quick service restaurants (QSR), direct-to-consumer (D2C) and electric vehicle market and infrastructure still hold promise this year, especially for early-stage platforms.

Startups created in 2023 are going to be more cash-conservative attitude and hence will be revenue and growth-focused.

Due to layoffs at some large corporations, well-funded startups now have access to a new pool of brilliant people, according to 100X.VC, India's first venture fund to invest in early-stage startups using iSAFE Notes.

"In 2023, we will be experiencing India, where new startups will be unlimited in supply. For investors, this will have brutal investment selection through the process of elimination," according to Sanjay Mehta, Founder & Partner, 100X.VC.

Investors who can apply quality filters pick winners in the start-up world while investing in 2023 will be able to see their portfolio shine with outlier returns by 2030, he added. Currently, the Indian startups, which saw a massive 35 per cent drop in funding in 2022 - from $37.2 billion in 2021 to $24.7 billion (till November) - are bracing themselves for a deepening funding winter in 2023.

Early-stage startups, however, in certain industries hold a promising future. QSR business is growing at a fast pace in India and is outpacing most of the sectors for investments. The segment will witness significant growth with better investment flow.

QSR is a promising business sector because of efficient cost operations, margins, impulse buying behaviour and a large addressable market that makes the business low-risk, scalable and profitable. India's e-commerce industry is expected to reach $200 billion in size by 2026, driven by increasing internet penetration and the proliferation of smartphones.

It is a significant opportunity for D2C brands to reach and sell to consumers directly online. In 2023, many digital-first direct-to-consumer (D2C) startups will compete with famous names, according to the report. The electric vehicle (EV) market for startups is growing. Startups are working on various technologies, including advanced battery technologies, charging infrastructure, EV components, and self-driving technology.

The EV market in India is expected to create 10 million direct jobs by 2030 and 50 million indirect jobs in the sector. According to Neha Singh, Co-Founder, Tracxn, in order to survive the drought, startups are taking unit economics more seriously, which has been illustrated through the series of mass layoffs that have occurred this year. "Although we are currently experiencing a slump, the situation is prompting startups to establish clearer and more sustainable paths to growth, as investors' evaluation metrics begin to emphasise good profitability over growth at all costs," Singh.