How India’s expanding unicorn landscape has fired up in 2021 and 2022


On Monday, Bengaluru-based neobank Open said it had raised funds at a valuation above $1 billion (or, about 7,500 crore). In the process, this fintech company that offers online-only banking services became India’s 100th startup to join the unicorn club — a valuation above $1 billion. It’s a key milestone for the Indian startup ecosystem. Globally, there are only around 1,000 unicorns, according to CB Insights, a research firm that tracks technology and startups.

While there are debates around overvaluation and bubbles, a $1 billion valuation is generally seen as validation of a business model. Similarly, the increasing number of unicorns in India is a marker of growing maturity of the online business space. Of these 100 unicorn startups, 60 have attained the status in just 2021 and 2022. In other words, India has produced more unicorns in the last 16 months than in 10 years before that. Be it the speed at which they became unicorns, or the sectors they are operating in or the cities they are coming from, there are differences in these two sets. That, at times, merits a cautionary tone.

A storm of unicorns since 2021

The Covid-19 pandemic was disruptive for startups, as it was for any other segment. Initially, venture capital (VC) firms – the main source of funding for startups – held back funding. They advised founders to take a harder look at their business models, cut costs, and focus on profitability.

But, as the pandemic extended, three things happened. First, with people homebound, the market for digital expanded rapidly. Second, there was an abundance of liquidity in the financial markets seeking investment avenues, and online businesses became attractive draws. Third, India’s capital market regulator eased norms for loss-making startups to go public, which saw companies such as Zomato, Paytm and PolicyBazaar open their shares for sale to the public. For private VC firms, a public listing gives them a quick exit route. All this saw more funds flow into startups, and at far richer valuations. In 2021, India created 46 unicorns, more than it did in all previous years put together. Not even halfway into 2022, the country has already created another 14 unicorns.

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A younger cohort attaining unicorn status

Besides more startups turning unicorns, in the last 16 months, a greater number of younger companies became unicorns than ever before. Of the 60 that turned unicorns, as many as 10 were founded in just the last three years. These are (in alphabetical order), Apna, BharatPe, CoinDCX, CRED, GlobalBees, Good Glamm, Mensa Brands, MPL, Pristyn Care and Zetwerk. Another 24 were between four and six years old. In the 2011-2020 set of 40 unicorns, these figures amounted to three and 14, respectively.

Older companies are turning unicorns too – indicating that the club is also becoming more diverse. Another 16 companies were 10 years or older, compared to 10 companies in the previous set. The age gap between the oldest and youngest member is 36 years in 2021-22 set, against 21 years in the previous set. Fractal Analytics, which became a unicorn this year, took 22 years to become one. Five Star Business Finance, which became a unicorn in 2021, was founded in 1984. Typically, it takes six to eight years to become a unicorn.

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Mumbai catches up to NCR, closes in on B’luru

Bengaluru, which has long been considered the startup capital of India, is home to 34 unicorn startups – dominating the national figures. It also added the most number of startups in the unicorn list (21) in 2021-22. Mumbai had the surprise showing in this list, matching Delhi-NCR, which has been catching up to Bengaluru in recent years. Against three unicorns till 2020, Mumbai added as many as 11 in 2021-22, including CoinDCX, Eruditus, and Gupshup.

Beyond the big metros, Jaipur (CarDekho, DealShare), Thane (Infra.Market) and Hyderabad (DarwinBox) registered their first unicorns in the 2021-22 period. This is reflective of a broader shift in the startup ecosystem, which has been spreading beyond the traditional hubs of Bengaluru, Mumbai and Delhi-NCR.

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But listing letdowns continue

In terms of sectors, the list of 60 unicorns from 2021 and 2022 contains a mix of old favourites (e-commerce and fintech) and new themes (health, artificial intelligence, and crypto). However, e-commerce itself has become more layered. For example, seven companies that turned unicorns in the last two years cater to business-to-business segments (for example, Moglix), as against consumer-facing companies such as Flipkart, one of India’s earliest unicorns.

Some of the capital flowing in, and the resultant valuations, are also priming these companies to list their shares on the stock market – and offer an exit route to private investors. So far, five companies from this set of 100 unicorns have gone public, all in the past 12 months. Only one of these five – Nykaa – is currently trading above its issue price. Valuable as these businesses are in the evolving business landscape, the value being assigned to them might, at times, be a stretch.

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