Unicorns Of India: Freshly Minted
Back in the day, it would take a company several years to acquire unicorn status. The story is quite different now, not only are we seeing a boom in unicorns, but the time it takes to get the unicorn tag has come down considerably. Close to 50 per cent of the companies are reaching the billion-dollar mark within five years. What is behind this accelerated pace? Is it sustainable?
Of course, these companies offer up superb services and products and have a great market strategy. Additionally, the business environment in the country with its focus on digital transformation has been conducive to their growth.
Equity and affordability of data have certainly helped these businesses strengthen their foundation. Think back to a few months ago when we were in the middle of the pandemic. Startups were almost indispensable, from groceries to medical supplies, they provided everything. They innovated quickly and created offerings for every need and as a result have an extremely loyal customer base.
The year 2021 was a fascinating one in the growth story of unicorns. As per the Orios Venture Partners report, Indian startups raised USD 42 billion last year, with 46 of them joining the unicorn club and taking the total number to 90. The fintech sector followed by ecommerce saw the maximum number of unicorns. It has been reported that as of July 2022, India is home to 105 unicorns with a total valuation of USD 338.50 billion.
The question, however, is: are we moving too fast? Do we need to have better checks and balances?
“According to a recent survey by Iron Pillar Funds, India is set to have 250 unicorns by 2025. The report says that during the past 15 months, the number of enterprises with unicorn status rose from 62 to 130. Though the target of 250 unicorns is still achievable, many VC players are saying that the pace may get a bit slower in 2022. While the growth of unicorns is important for the growth of the economy, the valuation needs to be checked as overvaluation, which may tend to happen, will slow down the pace of growth,” says K. R. Sekar, Partner, Deloitte India.
Ankit Prasad, Founder & CEO, Bobble AI, a conversation media platform startup, is a realist. He believes that being analytical and being able to assess the possible pitfalls is equally important as being optimistic about success. “Those startups which have been growing gradually but consistently and sustainably have higher chances of crossing the toughest of times.”
Higher Purpose
Ask any of the unicorns about their billion dollar valuations, and they will tell you it is not the unicorn tag that they are really after, it is a higher purpose they are working towards. That may be true but being branded a unicorn does put them in a different league altogether.
DealShare, a hyperlocal online buying platform has recorded close to USD 1 billion in gross revenue run rate, and it now aspires to get closer to USD 3-4 billion in gross revenue run rate within the next two years.
Co-founder Sourjyendu Medda says that being a unicorn creates a brand for the organisation. “The whole ecosystem, in terms of supplier and vendor network, also gets enriched once they come to know about the unicorn status. And once they learn about us, people want to attach themselves with us.”
In addition to a robust ecosystem that develops around unicorns, the higher purpose they work towards also gets a boost.
Srinath Ramakkrushnan, Co-founder at Zetwerk, an end-to-end manufacturing supply chain solutions provider, says they focus on unit economics, costs and responsibility towards the investors' trust, faith and money. “Naturally, we are aware of the responsibilities that come with the unicorn tag. However, we believe it is just the start of the journey for us, and we have struck a golden opportunity of bringing transformation into manufacturing, which is at the core of India's agenda for growth. We will play a pivotal role in ensuring the growth of the economy and the country over the next few decades.”
The growth of unicorns is undoubtedly beneficial to the economy. However, the question most people are asking is: will the unicorn boom continue?
According to K. R. Sekar, Partner, Deloitte India, our country has multiple advantages. “India has multiple advantages. The market is huge, and the intellect of Indian minds is quite well known. However, the global economy is facing challenges, but despite these global headwinds, the economic landscape is encouraging for India. I believe the combination of strong fundamentals and an optimistic economic outlook will create an environment conducive to the growth of Unicorns.”
All eyes will be on the next few months to gauge how this growth pans out. Watch this space for updates.
