Let’s try to Understand the current situation of India’s billion-dollar startups during the unicorn dry spell

▪️According to a Media house report, startups founded after 2015 are becoming unicorns in just 3.5 years.

▪️There are 25 unicorns in the e-commerce space, with Flipkart—which Walmart has since acquired—having the highest valuation at $37.3 billion. The enterprise IT and finance sectors, which produce 23 and 22 unicorns, respectively, follow closely behind.

▪️Enterprise tech makes up 83% of Indian unicorns with their headquarters outside of India. In all, 18% of Indian unicorns have their headquarters outside of India, with the US being their top choice.

The third-largest startup sector in the world is experiencing some of the most precarious circumstances right now, and it doesn’t appear like there will be any relief from the prolonged financial winter anytime soon. As a result, not even one firm has so far this year claimed the unicorn designation.

Due to the ecosystem’s current financial situation, Indian entrepreneurs were only able to raise $5.9 billion in the first seven months of 2023, compared to $19.7 billion and $21.2 billion during the same time periods in 2022 and 2021, respectively.

According to information gathered by us, 52 deals involving late-stage startups raised $3 Billion between January and July 2023. This represents a remarkable 75% decrease from the $12 Billion raised during the same time period the previous year and an 82% decrease from the $16.6 Billion raised during the same period in 2021.

Additionally, the continual market corrections and the unstable global economy have only encouraged investors to exercise greater prudence. Companies are currently battling heightened scrutiny of their business strategies and pressure to show profitability instead of making quick progress.

Due to the lack of available investment opportunities, once-promising businesses that were expected to become unicorns are now having trouble maintaining their present values.

Due to their perpetual struggle with losses and cash burn, well-known Indian startups including OYO, BYJU’S, Swiggy, PharmEasy, PineLabs, Meesho, and Ola recently suffered significant valuation markdowns on the books of their investors.

The combined FY21 loss for BYJU’S, which has not yet disclosed its financial results for FY22, increased by approximately 20X year over year to INR 4,588 Cr. Similar to Swiggy, PharmEasy saw losses totaling INR 2,731 Cr in FY22 compared to INR 641 Cr in FY21. Swiggy’s FY22 consolidated net loss also doubled to INR 3,628.9 Cr.

Nevertheless, it is undeniable that India, behind the US and China, has the ecosystem with the third-highest number of unicorns worldwide. With $99 billion in total capital, the 110 firms with valuations more than $1 billion collectively have a value of approximately $347 billion. According to Inc42’s “Decoding India’s Unicorn Club Report 2023,” the domestic unicorn ecosystem employed more than 4.5 Lakh people as of April 11, 2023.

Now, let’s quickly review some noteworthy data from our most recent study before delving further into the conclusions.

▪️Time It Takes To Become A Unicorn Has Significantly Decreased: Contrary to businesses that took more than 20 years to achieve unicorn status, such as Fractal, Pine Labs, MapmyIndia, and IndiaMART, Mensa Brands, GlobalBees, and 5ire were able to secure the coveted status within the first year of their existence.

▪️Startups Founded After 2015 Become Unicorns More Quickly: In just 3.5 years, startups founded after 2015 earned the fancy unicorn moniker. It didn’t take more than three years for names like Ola Electric, CRED, MPL, and Zetwerk to become household names.

▪️The business sectors with the most unicorns are: There are 25 unicorns in the country’s e-commerce market, with Flipkart—which Walmart has since acquired—having the highest valuation at $37.3 Billion. The fintech and enterprise tech sectors, which produce 23 and 22, respectively, follow closely after.
For Indian unicorns, the United States is their preferred destination: The enterprise tech industry is home to 83% of Indian unicorns, which are companies with their headquarters outside of India. In all, 18% of Indian unicorns have their headquarters outside of India, with the US being their top choice.

▪️The majority of unicorns on the board lack gender diversity: Only two of the 110 unicorn companies in the nation—Open Bank and Good Glamm Group—have more than one woman as a cofounder.

▪️Beyond IITs and IIMs, Investors Are Now Focusing: Non-IIT graduates make up 51.8% of unicorn founders.