A storm is brewing in India’s start-up scene as the country threw up six new unicorns with a valuation of $1 billion or more in days. The phenomenon is a rarity if one pays heed to the pundits but, in this case, it is also a reality.
As the Indian economy goes through the process of unlocking itself from the chains of the pandemic tech is playing an aggressive role in helping India turn the corner as a new disruptive normal begins to set in among the population and businesses.
This is specially in the world of start-ups where the world’s third-largest start-up eco-system has created a disruption. According to Dr. Param Shah, Director, FICCI (UK), who shares his expertise on start-ups in The Small Print, a weekly video despatch for India Global Business, “India is the land of the unicorns, when it comes to new unicorns in start-ups. It also has 52 ‘soonicorns’ with the potential to become unicorns by 2022. India is expected to have about 100 unicorns by 2025.”
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Dr. Shah’s projections were not entirely off the mark when one considers the red-letter day for the tech industry last week. According to a Bloomberg report, in a span of four days the country threw up at least six new start-ups with a valuation of $1 billion – unicorns - or more. The phenomenon is a rarity if one pays heed to the start-up pundits but, in this case, it is also a reality.
Bloomberg reported that the investment platform Groww raised money at a valuation of more than $1 billion, messaging bots startup Gupshup hit $1.4 billion, digital pharmacy API Holdings Pvt. was valued at close to $1.5 billion, app developer Mohalla Tech surpassed $2.1 billion, social commerce startup Meesho Inc. also reached $2.1 billion and financial-technology provider Cred rounded out the unicorns check list at $2.2 billion. India Global Business had earlier written that With nearly $50 billion raised in total in disclosed funding rounds, more than 15 unicorns have come up in India in the past two years, thanks to the rapid rise of the consumer market as well as the increasing adoption of digital services and products by individuals and businesses.
For the number crunchers this means that India has offered a total of seven new unicorns in 2020, according to market researcher CB Insights, as opposed to six in 2019.
Global investors such as Japan’s SoftBank Group Corp. and South Africa’s Naspers Ltd. Are gung ho about India’s start-up e co-system and given that the pandemic has seen an over-reliance on tech a nation with a population of roughly 1.3 billion has been exposed to the adoption of smartphones, low-cost internet services coupled with the desires of disruptive, ambitious entrepreneurs.
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Thus far India has been trailing the US and China in the area of venture capital invested in start-ups but, as Dr. Shah reiterated, “Given the vibrancy in the start-up eco-system India is set to achieve its targets.” According to research by Preqin, who deal in Indispensable data, analytics, and insights for alternative assets professionals around the globe, The reported value of deals in 2020 was $11.8 billion, compared with $143 billion in the U.S. and $83 billion in China,.
The potential for growth, however, is quite visible to the market watchers. There is also an impressive list of solid performances among existing unicorns. Digital payments giant Paytm is valued at $16 billion, online-education startup Byju’s is raising money at a $15 billion valuation, according to Bloomberg news.
Flipkart, the e-commerce giant acquired by Walmart Inc. in 2018, is eyeing an initial public offering in, the fourth quarter that could value the company at more than $35 billion.
According to a study done by the Credit Suisse Group AG last month there are about 100 unicorns in India with a combined market value of $240 billion, in sectors ranging from e-commerce and fintech to education, logistics and food-delivery. Given such evolving ground realities the country’s corporate environment is going through revamp. The sweet spot for start-ups typically lies in the cities of Bengaluru, Mumbai and NCR Delhi while cities like Pune, Hyderabad, Ahmedabad and Kolkata are also emerging as start-up hubs.
According to Bhaskar Majumdar, who wrote in From The Starting Line, his column for India Global Business, “From a mere 20,000 start-ups in 2014 the number has grown exponentially and will touch 75,000 by end of 2021. With overall funding skyrocketing between 2014 to end of 2020 around $75 billion, India has seen the entry of 38 startups in the Unicorn Club having a combined valuation of close to $ 125 billion.
Majumdar knows a thing or two about start-ups and he has shared this knowledge in a recently published bestselling book titled Everything Started From Nothing. The road ahead, according to Majumdar, is “now loaded with possibilities.”
And with good reason too. During the implementation of the national lockdown last year more than 1,600 new startups were founded, taking the total in the country to over 12,500, according to a January report by Nasscom, the country’s technology industry trade body. The report also touched upon the explosion waiting to take place by the “soonicorns.”
The word on the street is that at least six more unicorns are waiting to be unleashed in the next few months. Part of this is no doubt linked to funding. As Majumdar had stated in his column, “With a thriving start-up ecosystem in the country, founders today have much better access to funds than a decade ago…. there is never a bad time to launch a business. It is obvious why it is smart to launch when the economy is strong and growing. People have money and are looking for ways to spend it. Investors are in a more positive frame of mind.”