The term “unicorn” has become synonymous with Indian startups. Let’s take a look at how they’re impacting the Indian economy.
India is becoming the land of unicorns, with more and more startups achieving billion-dollar valuations. The country’s burgeoning entrepreneurial ecosystem is producing some of the most innovative and successful businesses in the world. Many Indian startups have joined the unicorn club, including Flipkart, Ola, Snapdeal and Paytm. These companies are changing the way people live and work in India, and they have a major impact on the country’s economy.
The rise of Indian unicorns is good news for the country’s entrepreneurs, who now have access to more funding and resources than ever before. This culture of entrepreneurship is driving economic growth and creating new opportunities for people across the country. With more and more unicorns being created every year, it seems like the sky is the limit.
Unicorn: a flashback
Coined by Founder of Cowboy Ventures Aileen Lee in 2013, the phrase “unicorn” refers to a privately-owned technology business with a valuation of US$1 billion or more (about Rs 7,500 crore).
InMobi, which was formed in January 2007, was India’s first unicorn startup and hence a forerunner of India’s unicorn club. It took four years for InMobi to become a unicorn. However, each company’s path to becoming a unicorn is unique. The shortest and longest time for a startup to become a unicorn is six months to 37 years, respectively. Mensa Brands, for example, became a unicorn in 2021 within six months of its launch, making it one of Asia’s fastest startups to become a unicorn.
What facilitates the growth of unicorn startups in India?
In a record-breaking year for startup investment, India saw the emergence of 42 unicorns, a threefold increase from the 11 new unicorns in 2020. Only four months into 2022, the country has witnessed 15 companies joining the unicorn club. With this addition, the total number of Indian companies in the unicorn club now stands at 99, with new entries from unconventional sectors, including conversational messaging, cryptocurrency, direct-to-consumer and cloud kitchens. These 99 Indian unicorns have successfully raised US$83 billion in investment and are collectively valued at US$332 billion.
The meteoric rise of India’s unicorns has been driven by a number of factors, including:
- A huge population: The country has over 1.3 billion people, which provides a large market for these startups to tap into. India also has a burgeoning middle class with more disposable income than ever before.
- A supportive government: The Indian government has been very supportive of the startup ecosystem. It has been implementing policies that provide a conducive environment for businesses to grow and raise funds.
- Increasing investment opportunities: The availability of capital has also increased, with more and more venture capitalists and private equity firms investing in Indian startups. In the first quarter of 2022, the number of Indian startups that have been funded hit a record high of 506, and the funds raised totaled to US$11.8 billion.
Besides these hardware-ish factors, the unicorn craze in India is also facilitated by the opportunities brought forth by the regulatory action on tech giants in China and the pandemic. Last year’s unicorn boom coincided with Beijing’s crackdown on Chinese internet businesses, which alarmed investors and drove them to look for alternative geographies to invest their funds. Simultaneously, COVID-19 compelled Indian customers to turn to online enterprises for their daily needs, ranging from food to medical services. These factors have offered new opportunities for Indian startups and contributed to the growth of Indian technological firms, resulting in an increase in the number of unicorns.
Unicorns’ contribution to the economy
According to Nasscom President Debjani Ghosh in the “NASSCOM Tech Start-up Report 2021 – Year of the Titans”, “The performance of the Indian startup ecosystem in 2021 has proved the resilience and dedication being put by multiple startups across segments. The ecosystem has grown immensely and positioned itself as a vital contributor to the growth of India’s digital economy.”
These startups are not only solving problems and advancing technology, but they are also creating large-scale job opportunities. As per the report, Indian startups generated 660,000 direct employment opportunities and 3.4 million indirect jobs in 2021, with e-commerce, mobility and food delivery platforms facilitating 70% of the total.
What lies ahead?
The rate at which unicorns were born in 2021—roughly one per week—indicates that the year’s investment boom was not a fluke. That global investors who moved their focus to India last year are still interested in opportunities here, despite a shaky global economy. Indian unicorns are also looking at public listing options as a next step in realizing their development potential. Nykaa, Zomato, Paytm, PolicyBazaar and Freshworks are among the notable unicorn brands that have already gone public, and there are many more on the way, including Delhivery, Mobikwik, and CarDekho.
The record investment boom is projected to continue this year, aided by India’s increasing embrace of technology and innovative startup products. 3one4 Capital, a venture capital firm for early-stage startups, forecasts that India may have over 150 unicorns by 2025. Maybe soon we will be seeing these impressive Indian unicorns turning into decacorns (with US$10 billion valuation) and hectocorns (with US$100 billion valuation).
Also Read:
- Five Most Valuable Startups in the World
- The Top Startups That Entered the Unicorn Club in 2021
- Unicorn Club 2020: 8 Startups That Became Indian Unicorns
- How Does a Startup Become a Unicorn
Header image courtesy of Freepik
