Indian startups are gearing up for an optimistic financial year 2024-25 (FY25), with plans to ramp up advertising and IT expenditures. The move follows a challenging FY24 marked by valuation drops, funding constraints, and shifting market dynamics. A recent survey by Inc42 reveals that 76% of over 400 Indian startup founders plan to increase advertising spending by 20-30%, while 74% anticipate a 10-30% rise in IT expenses.
Survey Findings:
The Inc42 Indian Startup Founder Sentiment Survey 2023 indicates a turnaround for FY25, positioning it as a growth-oriented year. Despite the cautious approach adopted by startups in FY24, the survey reflects a shift in sentiment, with founders focusing on revenue doubling, customer base expansion, team growth, and market entry.
Factors Driving Increased Spending:
- Expected Funding Boost: With a predicted 36% YoY increase in startup funding in 2024, over 72% of founders express intentions to raise funds. This anticipated influx of funds is a catalyst for increased spending on IT and promotional activities.
- Indian Advertising Market Growth: India’s ad market ranks 11th globally, and the plans of startups to scale ad expenditure align with the overall growth in the Indian advertising sector, particularly in the digital medium.
- Digital Advertising Momentum: The digital medium is poised to be a prominent platform for startups to connect with their audience. Digital advertising is expected to play a crucial role in the overall ad market growth, given the country’s digital-native startup landscape.
- AI & ML Driving IT Spends: India’s IT spending is projected to reach $124.6 billion in 2024, witnessing a 10% YoY increase. The surge in IT expenses is attributed to companies investing in enhancing their AI capabilities, with startups focusing on data, AI, ML, and product technology.
- GenAI Dominance: Indian CEOs are increasingly allocating budgets for generative artificial intelligence (GenAI), with startups exploring sector-agnostic use cases. The GenAI market in India is expected to exceed $17 billion by 2030.
Conclusion:
As Indian startups prepare for FY25, the strategic decision to increase IT and advertising spending aligns with the industry’s growth trajectory. The convergence of enhanced funding, a thriving ad market, and advancements in AI and ML positions FY25 as a pivotal period for substantial boosts in IT and advertising expenditures.
