INDIA’S UNICORN STARTUPS: A COMPREHENSIVE ANALYSIS

AUTHOR :NISHTHA BATRA

https://taxguru.in/finance/indias-unicorn-startups-comprehensive-analysis.html

It is no secret that India’s latest growth story is a tale of innovation and entrepreneurship. India’s unicorn club
is booming as is the overall startup landscape. Home to an impressive 107 unicorns with a total valuation of a
whopping $ 340.79 Bn, India has emerged as the 3rd largest ecosystem for startups globally (after US and
China) with over 77,000 recognized Startups as of 2022.

What’s more impressive is that 44 out of these startups shaping our economic landscape were born in 2021
alone! Building up on this established pace, the country further adorned its esteemed unicorn portfolio with 21
more unicorns in 2022 with a total valuation of $ 26.99 Bn. Today, 1 out every 10 unicorns globally have been
born in India.

With the foregoing snapshot of the latest data released by the DPIIT, it is crystal clear that in the backdrop of a
spirited and dynamic Indian economy, the Indian Unicorns have inked their thriving growth stories that have
become a global envy.

So, what exactly are these unicorns and what has led to this exponential growth in the number of Unicorns being
pumped out by the Indian economy? Let’s find out!

Page Contents

Bird’s Eye View:

India’s Unicorn Journey: From “Inmobi” to “Open”
Journey through the years
2021: The year of many firsts
The Holy Trifecta: What led to this Colossal Surge?
Top 10 Indian Unicorns by Valuation:
A healthy startup ecosystem: An Incubator for Unicorns
Startup India Initiative:
Emerging Trends
Sector Based Trends:
The funding landscape
Raising the bar: A chase for the Decacorn title
India’s Unicorn Landscape: Global Standing
Future Outlook:

Bird’s Eye View:

Total Startups (Registered) 77,000
Total Unicorns 107
Total Valuation of Unicorns $340.79 Bn
No. of Unicorns Acquired 5
10 (Zomato, Info Edge, Paytm, Freshworks, Policybazaar,
No. of Listed Unicorns
MakeMyTrip, Nykaa, Easemytrip and MaymyIndia)

India’s First Unicorn InMobi (2011)

18 (Nykaa’s Falguni Nayyar, Mamaearth’s Ghazal Alagh, Mobikwik’s Upan
Taku and BYJU’S Divya Gokulnath among
No. of Unicorns with Women Founders
others.)

Total funding raised by

$93 Bn
Unicorns

India’s Unicorn Journey: From “Inmobi” to “Open”

India has managed to witness a booming startup scene, and that too, in record time, evident from the
unprecedented surge in the number of startups joining the Unicorn club just after 2016. Around a mere decade
after we witnessed the first Indian Unicorn, “Inmobi” in 2011, we have now crossed the

much anticipated 100th landmark with “Open”, a Bengaluru based neo-banking fintech portal.
The economy and the populace at large benefits from the innovation, development and improvement of products
and services introduced by these startups, and the resultant employment generation. In 2022 alone, for example,
startups created jobs to the tune of around 2,30,000, despite the layoffs.

Geographically, nation’s very own Silicon Valley, Bengaluru is India’s unicorn capital with the largest number
of unicorns headquarters, followed by Delhi (NCR) and Mumbai.

Journey through the years

Evident from the graph above, till FY 2016-17, approximately one unicorn was being added every year,
followed by a remarkable boost from 2017, at a mighty 66% Year-on-Year growth rate.

2021: The year of many firsts

Out of the total number of unicorns, 44 unicorns with a total valuation of $ 93.00 Bn were born in 2021, the
HIGHEST till date.

In short, IT WAS RAINING UNICORNS!

Apart from the colossal no. of new entries in the Unicorn club, 2021 also witnessed the following firsts:

1st Healthtech Unicorn: Innovaccer

1st Social Commerce Unicorn: Meesho
1st E-Pharmacy Unicorn: Pharm-Easy

Another achievement witnessed in 2021 was that the Indian Unicorn, Mensa Brands took only 6 months to
become a unicorn in 2021, making it one of fastest unicorns in Asia.

The Holy Trifecta: What led to this Colossal Surge?

COVID-19 brought with itself, the age of digital businesses in India. The growth in the number of Unicorns in
India can thus be attributed to a trifecta of factors, as reiterated by Hon’ble Finance Minister Smt. Nirmala
Sitharaman:

Larger Smartphone and Internet penetration

Increasing adoption of digital payment mechanisms, an effort in the direction of a Cashless economy
Digital-first business models

Furthermore, the boom is largely led by tech companies, owing to increasing smartphone and internet userbase
in light of a much-needed digitization of economy during the pandemic.

Top 10 Indian Unicorns by Valuation:

Unicorn Valuation
Flipkart $37.6 billion
Paytm $5 billion
Byju’s $22 billion
OYO Hotels & Homes $9.6 billion (August 2021)
Dream11 $8 billion
Pharmeasy $1.5 billion
CRED $4.01 billion
BharatPe $2.85 billion
Meesho $5 Billion
Urban Company $2.8 Billion

A healthy startup ecosystem: An Incubator for Unicorns

A healthy number of Unicorns is nothing short of a testament to the vibrant startup ecosystem present in India.
The Indian startup ecosystem is spread across 56 diverse industrial sectors with 13% from IT services, 9%
healthcare and life sciences and 7% education, to quote a few.

India has emerged as the 3rd largest ecosystem for startups globally with over 77,000 DPIIT- recognized
startups, and ranks 2nd in innovation quality with top positions in the quality of scientific publications and the
quality of its universities among middle-income economies.

The perceived health of the Indian Startup Ecosystem is evident from the following data (2015-2022 till date), as
published by the Invest India:

15X increase in the total funding of startups

9X increase in the number of investors
7X increase in the number of incubators

With such a healthy functioning startup ecosystem, it is no surprise that we are witnessing an exponential
increase in the no. of new unicorns.

Startup India Initiative:

Startup India initiative, introduced in 2015 has played an important role in turning India’s unicorn landscape
into a global envy. With it, the Scheme brought numerous benefits to give a much-needed boost to the startup
ecosystem, including:

Incubation programs
Various Supportive Policies
Tax holidays
Tax benefit schemes

Emerging Trends
Sector Based Trends:

The lion’s share of India’s 107 unicorns is in the E-Commerce sector. It accounts for 23% of unicorns
and is followed closely by the Fintech Sector’s total of 22%.
Nykaa, LensKart, Flipkart, Cars24, and FirstCry are some e-Commerce names that have become a part of
most urban
FinTech is expected to take the crown of the ‘sector with most unicorns’ in the coming years, owing
largely to the fast economy-vide adoption of UPI as a payment system.
Surprisingly enough, the renewable energy sector has been graced with its very own Unicorn as well –
Renew Power, a company engaged primarily in assisting other companies with their ESG compliance.
Furthermore, the startup landscape is witnessing a strong wave of unconventional sectors as well, such as
Content, Gaming, Hospitality, Data management & analytics,

The funding landscape

More and more Indian unicorns are aspiring to go public to tap into the enormous reservoirs of their
perceived growth potential. In fact, we have witnessed a number of big unicorns joining the IPO
bandwagon in the recent years, including Zomato, Nykaa, PolicyBazaar, Paytm and Freshworks, though
the success of their IPOs varies.
 The alternative forms of finance, such as bank loans, venture debt, and revenue-based financing, appear
to be becoming more popular in India than the country’s more conventional methods of funding.
The creation of new unicorns without any investment to the tune of a billion dollars highlights the
changing funding situation in India. Zerodha, for example, bootstrapping since its inception, has changed
the game and serves as an example for the entire ecosystem.

Raising the bar: A chase for the Decacorn title

A decacorn is company that has attained a valuation of more than $ 10 Bn. Unicorns no longer being a
rarity for the Indian startup landscape, the country’s aspirations are slowly venturing into the “Decacron”
zone. Indian Unicorns have now found themselves joining the quest for the esteemed Decacorn title,
following the trail set by their Majority of these decacorn club contenders are from the fintech sector.
Four Indian startups, namely, Flipkart, BYJU’s, Nykaa and Swiggy, have marked their presence in the
Decacorn club, adorned with a total of 46 companies globally.

India’s Unicorn Landscape: Global Standing

India has emerged as one of the top 3 countries pumping out new unicorns, next only to the US, which boasts
around 806 unicorns, and China which boasts 217 unicorns. Thus, the global standing, in absolute numbers,
points to a severe variance. According to data aggregator Traxcn, the US produced 321 unicorns in 2021 as
against 44 in India. Further, China produced 21 unicorns in 2021.

Sector-wise, it is interesting to note that e-commerce unicorns lead the unicorn category in India as opposed
to the fintech sector that takes the lead on global platform.

Future Outlook:
Mr. Rajeev Chandrasekhar, the Union Minister of State for Entrepreneurship, Skill Development, Electronics &
Technology anticipates that the nation would witness an augmented boost in the next 2-3 years in its current
unicorn count, as high as 10 times the current figures, which will round up to a total of more than 1,000. The
next wave of startup founders is expected to come from the Tier 2 and Tier 3 cities of India, per the Central
Government’s estimates.

Whereas, a report titled “India Tech Trends” portrays a conservative yet promising estimate of a total of 250
Indian unicorns by 2025.

Furthermore, based on the established trends in the recent years, we can expect a significant number of the
Unicorns joining the IPO bandwagon in the upcoming years as well. The Decacorn club is also anticipated to
roll out the red carpet for more and more Indian unicorns in the near-future.

In addition, all major economies are intertwined with each other. Slow-down in another part of the world is
bound to affect another. It is also important to note that India only added around 21 unicorns in 2022, compared
to previous year’s 44. Despite this, the country still appears to be a very lucrative investment opportunity.

And if the experts’ estimations are correct, it will likely continue to rain unicorns in the future as well, as the
Indian middle class is only getting stronger.