Unicorns in India, Asserting that this is an era of start-ups, Prime Minister Narendra Modi on Sunday said India is leading the world in this field with more than 80 start-ups having crossed the valuation of USD 1 billion.
Unicorns in India
These days we hear all around us, start-up, start-up, start-up. It is true that this is the era of start-ups and it is also true that in the field of start-ups, in a way, India is leading the world. Even in small cities of the country, the reach of start-ups has increased. Unicorns in India, Nowadays the word unicorn is much in discussion. Unicorn is a start-up whose valuation is one billion dollars, around Rs 7,000 crore. Till 2015, there used to be nine or 10 unicorns in the country, you will be very happy to know that now India is flying high in the world of unicorns as well. According to a report, a big change has come this year. In just 10 months, a unicorn is being raised in India every 10 days
Startup Ecosystem in India
India has emerged as the 3rd largest ecosystem for startups globally with over 59,000 DPIIT-recognized startups across 634 districts of the country.
Indian Startup Ecosystem has seen exponential growth in past few years (2015-2021):
- 9X increase in the number of investors.
- 7X increase in the total funding of startups.
- 7X increase in the number of incubators
- What is a Unicorn?
Unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion.
- What triggered the unicorn rush during 2021?
While work from home during the pandemic fuelled the growth of digital businesses in India, the incident also resulted in a long unicorn list. Mainly three factors, a thriving digital payments ecosystem, large smartphone user base and digital-first business models, have come together to attract investors. Tech companies, which have become household brands, are contributing to the unicorn boom in India, as smartphone penetration and digitisation of commerce in every aspect of life has increased manifold during the pandemic. Besides financial technology, e-commerce grocery, SaaS and marketplace players are contributing the most to the unicorn universe.
Geographically, the center of India’s high-tech industry, Bengaluru is India’s unicorn capital with the largest number of unicorns headquarters followed by Delhi (NCR) and Mumbai. While we see unicorns active in Tier I cities, this ecosystem is not restricted and is proliferating across the country till the last district. Traditional sectors such as Fin-tech, E-commerce, Supply Chain & Logistics, Internet Software & Services do dominate the arena but a strong wave of unconventional sectors such as Content, Gaming, Hospitality, Data management & analytics, etc. are making their place on the list.
While every startup has its unique journey to becoming a unicorn, the minimum and maximum time taken by a startup to become a unicorn are 6 months and 37 years, respectively. Mensa Brands took only 6 months to become a unicorn in 2021, making it one of fastest unicorns in Asia.
Indian Startups turned Unicorns in 2021
In 2021 itself, India has witnessed the birth of number of unicorns in Bengaluru, Delhi NCR, and Mumbai continue to be the top cities preferred as unicorn headquarters in 2021. Unconventional sectors and sub-sectors marked an entry into the unicorn space including, NBFCs, Conversational Messaging, Cryptocurrency Exchanges, D2C, Cloud Kitchens and many others.
Indian unicorns are also exploring the public listing avenues as a next step to realize the growth potential. Some one of big unicorn names that offered an IPO include Zomato, Nykaa, PolicyBazaar, Paytm and Freshworks, while many are already in line such as Delhivery, Mobikwik and CarDekho.
Today, 1 out every 10 unicorns globally have been born in India. Overall, 2021 is experiencing an exponential boom when it comes to startups entering the unicorn club. This is a testament to the vibrant startup ecosystem present in India
Investors in Unicorns
The robust nature of the Indian startup ecosystem is evident in 2021 year-to-date when as per a YourStory Report, in Q3 2021, 23 funding deals with ticket sizes equal to or more than $ 100 million were observed. Out of these, 4 deals were sized at more than $ 500 million. Sequoia has been the most active investor in Indian Unicorns, followed by Tiger Global Management, Accel, and Softbank.
Additionally, there also has been a shift in the traditional way of funding, wherein startups are now looking at exercising alternate routes such as crowdfunding, revenue-based financing, venture debt, bank loans, etc. Startups such as Zerodha, which have been bootstrapping since inception are changing the unicorn funding norms and promoting independence and revenue generation since the early stages. Since the onset of COVID-19, an unconventional trend observed is the new entries to the unicorn club without any billion-dollar ticket size investment.
Upcoming Indian Unicorns
India will manage to get more than 100 unicorns by 2022, much earlier than the previewed estimation of 2023 reports in the past. The pace with which these companies are gaining valuations is truly remarkable. India’s pace of unicorn growth has surpassed that of China. The Indian economy is capitalizing on a host of international and national factors that are expected to create many more such companies.
The Indian e-commerce industry has been on the rise, and by 2034, it is predicted to overtake the USA as the world’s second-largest e-commerce market. Potential Soonicorns that are likely to give high returns to their investors in the longer run:
- Pepperfry: Pepperfry is an online furniture and home décor shopping store. Pepperfry’s platform has expanded into both online and offline business. The company expects to be in the unicorn club soon in terms of valuation before IPO hits the market for 12 months. Company’s focus has shifted from achieving profitability to becoming a high-growth company.
- Freshtohome: Freshtohome is a leader in leveraging AI-based technology and business innovation to bring a superior value proposition to customers and suppliers in a large market. Freshtohome manages to sell nearly 10K tones of produce per year and has close to selling 95% qualified cohort retention and doubling every year. It has 12 lakh registered users. The pandemic helped accelerate the online purchase of meat products as consumers took to branded packaged items.