Unicorn, as used in the venture capital industry, refers to a startup that reaches a valuation of $1 billion. Achieving the milestone, once considered impossible suddenly seems to have come within every startup’s reach. In the blockbuster year of 2021, India saw the creation of 42 unicorns, and 11 new ones already in the first 70 days of 2022, taking the total to 92 as of date. There are predictions that India will be home to more than 150 unicorns by 2025.
India’s ecosystem is maturing. There was a record number of IPOs in 2021 with 63 companies raising almost Rs 1.19 lakh crore from the public. In fact, it was the new-age technology brands like Paytm, Zomato, Nykaa, and Policybazaar that led this record mop-up. This was made possible by the simplification of rules by the Securities and Exchange Board of India as per which the loss-making companies could also get listed with some conditions as against the earlier regulation that required a firm to have profit-making records in order to get listed. This paved the way for the listing of the new-age technology firms like Zomato and Paytm that have a history of loss-making.
The question is can Indian startups keep growing at this breakneck speed? The answer is an emphatic yes. Unlike in the past, infrastructure for creating a large corporation now exists in India. India has one of the cheapest high-quality internet availability, thanks to the revolution ushered in this space by Reliance Jio. India now boasts of more than 800 million internet users. This has opened new opportunities for companies and consumers alike. Consumers, especially the young generation is ready to embrace many new business models.
Starting from the e-commerce companies like Flipkart and Amazon to ed-tech companies like Byju’s and UpGrad, to entertainment companies like Netflix and Spotify, to the recent ‘Direct to Customer’ brands like Mama Earth and BoAt, to the blue-collared jobs app – Apna, the livestock animals trading app -Animal, the obsession with innovation both in product and marketing is giving birth to new companies every day. As a developing country, India had several gaps or inefficiencies in business processes in every sector. Most of these new-age companies are simply plugging the holes or modernizing the ways of doing business to ensure their customers’ life becomes easy, productive, and enjoyable.
Covid too became another factor in the rapid growth of unicorns. Startups were forced to move to a digital-first strategy and this allowed several brands to become visible as the generations of both the young and the old were sitting at home with mobile phones or laptops as their only sources of interaction with the wider world. As scaling a business has become more democratic, it has led to an entrepreneurship boom and the future will see many unicorns coming out of Covid period startups. Startups have a lot to thank the young generation for another reason. Working in startups, earlier considered risky has now become a viable career option. So, there is energetic and trained manpower that is willing to experiment with their talent and their future.
With the growing population of youth, funds across the world have to know focused their attention on India. China’s crackdown on tech companies to has helped India bolster its attractiveness as an emerging market alternative. These funds have set up offices here, hunting for the companies that could transform the country in different ways and touch sky-high valuations. It was thus that India surpassed China in getting venture capital funding for the first time in 2021. Nykaa and Zomato’s IPOs have been game-changers. These have reaffirmed the faith of investors in getting an exit for their investments in multiples unheard of in India’s economic history. It is thus that funds from across the world are making a beeline for making investments in India.
With the Prime Minister announcing his ambitious plan to make India a 5-trillion dollar economy, there is enthusiasm in both the countrymen and investors to become part of this exciting vision for New India having a large market, receptive to fresh ideas that can become viable and sustainable businesses of the future of a rising India.
