The term unicorn refers to a privately held startup company with a value of over $1 billion. It is commonly used in the venture capital industry. The term was first published in 2013, coined by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.
India’s startup ecosystem is robust and it recently crossed the 100 Unicorn milestone in 2022. A neo banking platform “Open” was the 100th Indian company to hit the $1 billion valuation. Currently India has about 108 startups with the unicorn status and with a total valuation of over $340 billion. India stands third in the world where unicorn startups are concerned, next only to the USA and China. This is no mean feat!
Some of the companies which achieved the unicorn status is 2022 are Fractal Analytics, LEAD School, Darwinbox, DealShare, ElasticRun, Livspace, Xpressbees, Uniphore, Hasura, CredAvenue, Amagi, CommerceIQ, Oxyzo, Games 24×7, Open, PhysicsWallah, Purplle, LeadSquared, OneCard, and 5ire.
The picture however is not all rosy. This is a grim reality we all need to face as many of these unicorns are making heavy losses. Some of the top loss making companies are listed below. Most of these companies have resorted to mass layoffs to keep the losses in check. Many have recently launched initial public offerings (IPOs) or are planning one soon.
|2||OYO||Rs. 3,944 crore|
|3||Udaan||Rs. 2,482 crore|
|4||Flipkart||Rs. 2,446 crore|
|5||Eruditus||Rs. 1,934 crore|
We have to question if we are going overboard with valuation of startups. Under normal circumstances, the higher the valuation of a startup, the better it is for all stakeholders involved. High valuations indicate success and the potential of a business. But with so many startups bleeding losses, over valuation is a poignant question to ask. It has been said that startup valuation is more of an art than science. This is true in many ways and has contributed to overvaluation in the tech startup ecosystem.
We have witnessed an improvement in valuations in 2022. Only 21 startups have turned unicorns in 2022 so far as compared to 44 in 2021. The funding raised by Indian startups during the period January 2022 to September 2022 fell almost 19% as compared to 2021. Several companies like Blinkit, Snapdeal and Paytm Mall have lost their unicorn status
A report by Hurun Research Institute showed that India’s future unicorns, including Shiprocket, Zepto, Turtlemint, Pepperfry, Juspay and Ather Energy, are currently worth $49 billion, a 36% jump in value compared to last year. Financial services, logistics, healthcare and education are among the most focused sub-segments by the future unicorns.
Bangalore, the hub for startups has 46 potential unicorn companies followed by 25 from Delhi and 16 from Mumbai. With support from the Indian government it is expected that we will be seeing unicorns emerging from tier 2 and tier 3 cities in the next few years. We have listed 10 companies with the most potential to reach unicorn status in 2023.
|4||Ather Energy||Electric Vehicles|
In today’s dynamic and fast-paced market, the Indian unicorns are thriving. These businesses are not only creating cutting-edge products and technologies but also creating jobs for thousands of people. The investors who believe in the ideas and potential of these startups are helping the startup ecosystem to thrive. The most active investor is Sequoia Capital India followed by Tiger Global Management, Kunal Shah (Founder, CRED), Better Capital, Inflection Point Ventures, LetsVenture, Accel, Blume Ventures, 9 Unicorns, and Alpha Wave Global.
Securing funding at the right time is the key to achieving unicorn status. In recent times there is a change in the conventional method of fundraising. Companies are now considering alternative methods such as venture debt, bank loans, revenue-based financing, and crowdfunding. Startups like Zerodha, who have operated entirely on their own funds since the beginning, are challenging the unicorn funding rules. Some of the most valued Unicorn startups of 2023 are Flipkart, Ola Cabs, BharatPe, Swiggy, Make My Trip and Nykaa.