India’s 100 Unicorn Startups – Marks A New Milestone For India’s Startup Economy
After a whopping 42 unicorns in 2021, the Indian startup ecosystem was only a few steps from a century of unicorns. India had increased its unicorn count to 84 by the end of 2021, and two publicly traded firms — MapmyIndia and EaseMyTrip — joined the unicorn club. This number increased by 13 in the first quarter of 2022, reaching 99 businesses with a valuation of more than $1 billion.
Now, neobanking company Open has joined the fray, having raised a Series D funding round from IIFL with Temasek, Tiger Global, and 3one4 Capital. With a $50 million funding round, the business claims to be India’s 100th unicorn.
The news of India’s 100th unicorn elicited a broad spectrum of emotions from the ecosystem, with many highlighting the country’s illustrious startup history over the last decade.
“What an incredible achievement!” In 2011, the first Indian unicorn was discovered. “Here we are, 11 years later, greeting the 100th Indian unicorn,” Sequoia Capital India managing director Rajan Anandan tweeted.
The Union Minister for industry and commerce, Piyush Goyal, also congratulated the team on this significant achievement.
“India = Ideas + Innovation + Investments,” Goyal remarked, adding that the country had celebrated its 100th birthday in style.
Open’s unicorn status comes after a month in which significant investment rounds were largely absent from the ecosystem. There was a sense that reaching the milestone of the 100th unicorn would take a long time due to the funding boom’s plateauing.
Decoding India’s Unicorn Rush: 100 Unicorns
The startup scene has been entirely altered by increased fundraising and cash raised at high values in the last few years. In a record-breaking year for Indian IT in 2021, businesses raised $42 billion in 1,579 deals, resulting in a unicorn frenzy.
The number of unicorns was thrown out the window with the arrival of 42 unicorns last year. In terms of startup predictions and expectations, a new standard was established.
For example, according to an analysis released at the end of 2019, India will have 100 unicorns by 2025. The massive adoption of digital products and services by consumers and companies in the aftermath of the pandemic and during the last two years has changed the projected trend. However, after factoring in growth in 2021, we reduced this to 100 companies by the end of 2022. And with 100 unicorns expected before the end of the year, we estimate India will have 250 unicorns by 2025.
Since 2020, Indian startups have grown and scaled massively, resulting in a flood of capital from overseas investors and an expansion of the domestic investor pool. The focus now shifts to the following great milestones.
Already, the government has set an aim of 1,000 unicorn companies in the next two to three years, with a large number of new unicorn startups expected to come from India’s hinterlands. It is to be seen if this will happen, as some crucial sectors need more policy clarity.
However, unicorn creation has accelerated in the last two years is undeniable. Here are fascinating findings from India’s unicorn club of 100 members.
Unicorns In India: Total Valuation Of Over $333 Bn
The total value of India’s 100 unicorns is 333 billion dollars, with Flipkart and BYJU’S being the two most valuable privately-held firms with valuations of $37.6 billion and $21 billion, respectively.
Nykaa currently leads the list of publicly-traded firms with a market capitalisation of over $1 billion, with a valuation of approximately $10.6 billion.
Ecommerce takes the lead, followed by Fintech
Open is not only India’s 100th unicorn but the 20th unicorn in the fintech industry. Apart from that, Open is the third neobanking firm to join the club, following Zeta and Razorpay, both of which provide neobanking services.
Fintech is only the second startup industry to reach the milestone of 20 unicorns, trailing only eCommerce, which has 23 unicorns. With 17 unicorns in the sector, Enterprise tech is on track to join this club next.
Bengaluru’s Unicorn Dominance Grows
Open, India’s 100th unicorn, was formed in Bengaluru, making it the 39th firm from India’s so-called startup hub to hit the $1 billion valuation mark. Last year, Bengaluru, home to India’s first unicorn, InMobi, produced 17 unicorns.
With 29 unicorn startups, Delhi-NCR is a distant second, while Mumbai falls even farther behind with 15 unicorn startups.
A record number of unicorns in 2021 had already set high expectations for 2022, and now, all eyes are on the next group of businesses that will make it to the unicorn club and take it beyond 100.
In 2021, we witnessed more unicorns or possible unicorns than in any other year, similar to the unicorn craze. Many of the unicorn club’s 73 firms have advanced to unicorn status. According to data from 2021, Bengaluru had 31 unicorns, with 19 from Mumbai and 13 from Delhi-NCR.
Of course, while these estimates were made following a record-breaking year in terms of investment, there has been a massive drop-off in 2022. Month-to-month funding figures have dropped from $4.6 billion in January 2022 to $3.4 billion in March, and now $2.6 billion this month. The projected IPO frenzy in 2022 has failed to materialise due to investors’ worldwide shift toward better-value ventures.
It was suggested earlier that the combination of a slowing economy and greater attention to corporate governance and financial standards will result in layoffs, down rounds, low valuations, and distressed M&As for Indian companies. But for the time being, the attention will be on the Indian startup ecosystem’s 100th unicorn.
What is a unicorn?
A unicorn is a startup valued at $1 billion or more in the venture capital industry.
Cowboy Ventures CEO Aileen Lee developed the word unicorn to describe the 39 firms with a valuation of more than $1 billion. The term was coined to stress the rarity of such companies at the time. Since then, the definition of a unicorn startup has stayed unaltered. Unicorns, on the other hand, have become more plentiful.
Features of a unicorn startup
• Disruptive innovation: Almost every unicorn has substantially contributed to their profession. Like Uber, it transformed the way people commuted. Airbnb, for example, revolutionised the way people booked vacations, while Snapchat revolutionised social media usage.
• The ‘firsts’: Unicorns have a reputation for being trailblazers in their domains. They gradually change people’s behaviour and eventually become a requirement. They are supposed to be developing to keep ahead of the competition.
• High-tech: Unicorns are known for their technology-based business strategies.
• Consumer-oriented: Unicorns in the B2C sector account for 62 per cent of all unicorns. Customers want things to be simple for them and use them daily. Another distinctive point of these businesses is their low-cost structure. Spotify, for example, has increased the accessibility of music to people all around the world.
• Privately held: Most unicorns are privately owned; their value rises when a large firm invests in them.
There are 361 private businesses valued at more than $1 billion in the world. India has sixteen companies, which account for 4 per cent of the global market. India is only behind the United Kingdom regarding unicorns, with 19 and a 5% global share.
Can only a startup be a unicorn?
Yes, you’re right. A unicorn is a corporation with a $1 billion or more market valuation. Decacorns are companies with a market valuation of greater than $10 billion. Dropbox, SpaceX, and WeWork are a few examples of decacorn companies.
What we call a unicorn has its own name in the world of Canadian startups. The word is ‘narwhal.’ A narwhal is a publicly-traded company in Canada with a market valuation of over $1 billion.
List of unicorn startups in India
Flipkart: Flipkart, which was founded in 2007 and is now one of India’s largest e-commerce companies, is the success story of Sachin and Binny Bansal. With a market capitalisation of more than $15.5 billion, Flipkart is far ahead of all other Indian e-commerce enterprises.
PayTM: PayTM was formed by Vijay Shekhar in 2010 and is owned by One97 Communications, founded in 2010 when mobile phones were still relatively new to Indians. One97 Communications was renamed PayTM after moving from mobile top-up service to a bus and rail booking service, a bill payment enabler, and a full-fledged payment service provider for businesses. The current market capitalisation of PayTM is a little under $2 billion.
Razorpay: GIC, Singapore’s sovereign wealth fund, Sequoia Capital, and our current investors Ribbit Capital, Tiger Global, Y-Combinator, and Matrix Partners, co-founded a Bangalore-based fintech business that became a unicorn after collecting $100 million in Series D funding. They started the company to support every business in accepting digital payments, and they’ve made great strides in that direction.
Meesho: Meesho is a reseller platform for small and medium enterprises that allows them to build an online presence utilising social media platforms like Facebook, Instagram, and WhatsApp. Sanjeev and Aatrey Barnwal founded it in 2015. The company claims to have over 100K registered suppliers who provide over 26K postal codes in over 4000 locations, with individual enterprises making over INR 500 crore.
PharmEasy: Founded in 2015 by Dhaval Shah and Dharmil Sheth, PharmEasy provides a wide range of services, like sample collection for diagnostic tests, teleconsultation, prescription delivery, etc. It allows pharmacists to package orders with delivery and logistics assistance. PharmEasy works with approximately 60K pharmacies and 4K doctors across India, encompassing 16K postal codes.
Cred: The Bangalore-based fintech business was founded by Kunal Shah in 2018, and it was recently admitted to the unicorn club with a $2.2 billion valuation. CRED is a members-only organisation that rewards prompt credit card bill payments with enticing discounts and access to high-quality events. It’s a programme that allows customers to manage multiple credit cards while receiving a credit report.
Urban Company: It’s a one-stop shop that connects customers with high-end service providers like masseurs, beauticians, upholstery cleaners, carpenters, and technicians. Abhiraj Bhal, Raghav Chandra, and Varun Khaitan launched it in 2014. Urban Company’s 40,000+ licenced service experts network has served over 5 million customers in major urban areas worldwide.
Zeta: By providing credit, debit, and prepaid cards, Zeta is a neo-banking platform that allows firms to create innovative retail and corporate solutions. Businesses can turn to Zeta for digitised solutions if they want to automate.
BharatPe: BharatPe was created in 2018 by Ashneer Grover and Shashvat Nakrani. BharatPe was India’s first startup to offer UPI QR codes, and it has since expanded its offerings to include other financial services. With over fifty lakh merchants in 35 cities in India, it is the leader in UPI offline transactions.
Mindtickle: Mindtickle is a data-driven sales preparedness and enablement tool that assists businesses in increasing revenue and brand loyalty. Revenue and sales leaders use Mindtickle to constantly assess and improve the knowledge, skills, and behaviours needed to engage buyers, accelerate sales, and drive growth effectively.
The GST in India has influenced how businesses work today. Many indirect taxes have been eliminated, and they have all been rolled into the GST. Precise GST standards must be followed for startups to gain compliance relief and other benefits.
THE INDIAN UNICORN LANDSCAPE
Startup Ecosystem in India
As of 2022, India had become the world’s third-largest startup ecosystem, with around 66,359 DPIIT-recognized enterprises spread throughout 642 districts. India ranks second among middle-income countries regarding innovation quality, with top rankings in scientific publications and university quality. India’s ingenuity isn’t limited to a few fields. Companies aiming to tackle problems in 56 different areas were uncovered, with IT services for 13 per cent, education for 7 per cent, agriculture for 5%, and food and beverages for 5%.
The Indian startup ecosystem has grown exponentially in recent years, with the number of investors increasing by 9X, overall startup funding increasing by 7X, and the number of incubators increasing by 7X.
Indian unicorns are thriving in today’s fast-paced and dynamic market. These companies have a large workforce and develop cutting-edge solutions and technologies. Until the year 2016-17, one unicorn was added on average per year. The number of new unicorns that grew each year has steadily increased over the last four years (beginning in FY 2017-18), with an astounding 66 per cent rise year over year. India has 94 unicorns with a combined worth of $319.67 billion as of March 25, 2022. In 2021, 44 unicorns with a total value of $ 94.77 billion were born, while in 2022, 13 unicorns with a total value of $ 25.4 billion were born.
Investors in Unicorns
According to a Report, 23 investment deals with ticket values equal to or greater than $ 100 million were reported in Q3 2021, demonstrating the Indian startup ecosystem’s robustness. Each of the four transactions was worth more than $500 million. The most active investor in Indian startups has been Sequoia Capital, followed by Tiger Global Management, Accel, and Softbank.
Moreover, traditional fundraising methods have altered, with entrepreneurs considering choices like crowdfunding, revenue-based financing, venture debt, and bank loans. Startups like Zerodha, which has been bootstrapping from its inception, are bucking unicorn funding rules by encouraging independence and income generation from the start.
Unicorn Sector Snaps
Following the outbreak, the Indian HealthTech business is expected to develop at a 39 per cent compound annual growth rate (CAGR) to $ 5 billion by 2023. The digital revolution aided the market’s rise, increased technology, and favourable government policies.
Innovaccer, a health tech business, has become the first Indian unicorn in the healthcare sector, with a valuation of $ 1.3 billion. Innovaccer’s healthcare data analysis can assist healthcare practitioners, hospitals, insurance companies, and other organisations and firms.
Pharmeasy, an online pharmacy and diagnostics startup, became a unicorn earlier this year with around $ 1.5 billion. The internet pharmacy intends to go public in the near future, with an approximately $7 billion IPO valuation.
Thanks to health-tech businesses like Cure, India’s healthcare sector will soon see a surge of unicorns.fit, Practo, HealthifyMe, and others.
• Social Commerce
In July 2021, social commerce businesses in India made $554 million in sales, a 7x increase over the previous year and the biggest since 2015.
According to experts who see the sector as an extension of e-commerce, social commerce has helped boost the overall e-commerce industry by opening tier 2 and tier 3 markets and allowing large e-commerce platforms to reach low-margin categories in FMCG and groceries.
Meesho, a Facebook-backed social commerce startup, has become the first Indian social commerce company to join the unicorn club, valued at $ 2.1 billion. It is a social media reseller network for people and small and medium enterprises (SMBs) who sell products to other network users via WhatsApp, Facebook, and Instagram. It has about 13 million individual entrepreneurs who supply eCommerce services to 45 million Indian customers.
It claims to have delivered orders from over 100K suppliers to over 26000 pin codes over 4,800 locations, with individual companies earning more than INR 500 crore.
SimSim, Deal share, CityMall, and Bulbul are many firms vying for customers’ and investors’ attention in India’s social commerce sector.
According to Piyush Goyal, India has created a unicorn every five days since 2022.
Eight new Indian firms have joined the list of Unicorns in the first 40 days of 2022, kicking off the year on a high note. A unicorn is a company with a market valuation of $1 billion or more. According to Piyush Goyal, India has generated a unicorn every five days in 2022. Two of the newest Unicorn members are Polygon, a blockchain technology business, and ElasticRun, a B2B e-commerce company.
During the first event of the Indian Startup India Innovation Week earlier this month, Goyal called to create 75 new unicorns by 2022. According to the minister, corporations are anticipated to add 75 new unicorns in 2022, with half of the total eighty-three unicorns valued at $1 billion in 2021.
Goyal praised new-age entrepreneurs, noting that Indian businesses had demonstrated exceptional growth and converted adversity into opportunity.
India is becoming a global unicorn hub. Here’s why
A spate of unicorns appeared in 2020. Eleven unicorns have been discovered in recent years, first appearing in 2021. The current total stands at 37, up 33% over the previous year!
India’s startup ecosystem is the world’s third-largest and, without a doubt, the fastest-growing. Not as a result of the epidemic, but these businesses have grown exponentially. They took advantage of shifting consumer preferences and promptly adjusted/swivelled to meet their customers’ wants. These businesses stressed the importance of focusing on the market and the client to grow. They also received funding from a number of well-known Indian and international investors. Each of these businesses has raised capital and provided value to its investors.
India is, unsurprisingly, at the centre of the world’s attention. Large, diverse markets, technological innovation, groundbreaking proposals, and highly high-quality people are just a few things that contribute to a startup’s success. The international investor community pays attention to the country and its enterprises to make swift investments. India has had $250 billion in foreign direct investment in the five years since 2015. VC and private equity have invested in unlisted startups and expanding businesses, resulting in the formation of unicorns, accounting for about 75% of total FDI, or $184 billion.
India has a long history of innovation and fast-growing businesses in several fields. Education, beauty, fintech, e-commerce, mobility, salon and spa management software, healthcare, groceries, insurance, food tech, analytics, mobile ads, and other industries have produced Indian unicorns. These firms cater to both businesses and consumers, using many business models like B2B, B2C, and B2B2C.
Three decacorns and 37 unicorns have been produced in India, which has led the way. Nonetheless, transformative businesses that solve global problems and expand globally have just begun to appear in the country.
A unicorn has been bred into two more unicorns in the Indian ecosystem.
In the Indian ecosystem, a unicorn has given birth to two more unicorns. This is unique in that it assists entrepreneurs in establishing lucrative businesses and shows the value made for investors. Decacorns, valued at $10 billion, has recently been seen in India! India currently has three decacorns, with more on the way!
Due to the lockdown and social isolation, some businesses were compelled to switch from manual to digital operations, resulting in more good channels for market forces. AI, the internet of things, data analytics, big data, robots, and other cutting-edge technologies were used by several companies to fill gaps in the business. They took advantage of consumer/customer demand for digital, which boosted corporate growth.
India is, without a doubt, the focus of the world’s attention. The startup growth story includes large, diverse markets, technological innovation, groundbreaking proposals, and extraordinarily high-quality individuals. The international investor community pays great attention to the country and its firms to make swift investments. India has attracted $250 billion in FDI in the five years since 2015. Venture capital and private equity funds account for about 75% of total FDI, or $184 billion, resulting in the development of unicorns.
According to a collaborative estimate by Nasscom and Zinnov, India would have a unicorn club of fifty or more by 2021 and a unicorn club of 100 by 2025. This is a reasonable goal to set. Many’ soonicorns,’ or unicorns, are en route to the countryside. We won’t be astonished if India meets its unicorn target of 100 by 2025! These will, inevitably, come from untapped areas like agritech, health tech, cleantech, and so on.
These organisations provide solutions for India in response to Prime Minister Narendra Modi’s demand for ‘Atmanirbhar Bharat.’ However, because they have gone worldwide, they are answers for the entire planet. They’ve created multi-national enterprises and produced best-in-class solutions to address the world’s actual challenges.
These firms that have created value are now looking ahead because their founders are aware of their responsibilities to investors, employees, and stakeholders. They recognise the importance of providing growth possibilities for investors, employees, and other stakeholders. Interestingly, 60 per cent of Indian firms that went public in the last five years were supported by VC/PE funds, which are the primary funders of the startup ecosystem.
VC/PE-backed companies, led by the decacorns, unicorns, and soonicorns, have created 1.3 times the number of jobs and paid nearly twice tax as non-funded companies. Thanks to angel investors, venture capitalists, and private equity firms, the new business clearly creates wealth for its founders, employees, and investors.
Three decacorns and 37 unicorns have been produced in India, which has led the way. Nonetheless, transformative businesses that solve global problems and expand globally have just recently started to appear in the country. Unicorns are expected to develop at a faster rate in the ecosystem from a variety of industries and regions across the country, including tier two and tier three cities.
That isn’t the case now. They’ll be in herds, and there will be a lot more of them.
Going Beyond the Unicorn
The global startup ecosystem is transforming as the world understands the potential of startups. The decacorn age is progressively taking over from the unicorn era.
A corporation having a market valuation of $10 billion or more is called a decacorn.
As of January 2022, 46 companies from all over the world have been given the decacorn designation. The Indian startups in the decacorn cohort are Flipkart, BYJU’s, Paytm, and Swiggy.
edited and proofread by nikita sharma