India Likely to See 100 Unicorns by 2023

Therefore, at this pace, the country is probable to see 100 unicorns by 2023, which is much earlier than the 2025 projection.

Zomato’s stock-market debut

Zomato Ltd. became India’s 1st unicorn that has made its stock-market debut. The company by raising USD 1.3 billion with backing from Morgan Stanley, Tiger Global and Fidelity investments. Further, Paytm – the digital payments startup filed a draft prospectus for what could be our country’s largest IPO at USD 2.2 billion. And, Flipkart – the Indian e-commerce retailer raised USD 3.6 billion at a USD 38 billion valuation, which is a record funding for an Indian startup.

“Indian entrepreneurs have been quietly building start-ups for a decade now, the country’s internet infrastructure has vastly improved in that time and there’s a very good appetite for tech stocks globally,” said Hans Tung, the Silicon Valley-based managing partner of GGV Capital, which manages USD 9.2 billion in assets.

The guiding light

The Indian startup ecosystem for long has banked on ecommerce giants such as Flipkart, Snapdeal, Myntra and other vertical platforms. However, in the last six years, startups in the fintech industry have an avg. annual growth rate of capital inflow with the highest share of venture capital funding in the country.

While India is home to over 5694 active investors, it is found out that around 27 percent of the total investors are from the United States. This has made the US the largest contributor to the growth of entrepreneurship and startups in India.

Record Funding of USD 6.3 billion

While India had a record funding of USD 6.3 billion, in the 2nd quarter with agreements and deals for startups in the technology sector, funding to China-based enterprises came down to 18 % from a height of USD 27.7 billion in the 4th quarter of 2020, as per data from CB insights.

“$1 billion is the new $100 million,” said Krishnan Ganesh, a serial entrepreneur who now promotes companies that have attracted investors such as Sequoia Capital, Lightspeed Venture Partners and Qualcomm Ventures. “Global investors see the potential upside in India’s huge, under-penetrated market and capital flows have multiplied 10 times.” “The proliferation of smartphones and the internet has allowed tech entrepreneurs to create new age business models to reach the country’s farthest corners,” said entrepreneur Ganesh.

And with the promise of huge returns for large investors as start-ups proliferate, the number of public share sales would also encourage further rounds of funding. For instance, SoftBank Group Corp, Japan, that sold out of Flipkart 3 years ago for a profit, has come back intending to invest recently.

“India’s consumer internet companies have come of age,” said tech tycoon Nandan Nilekani, chairman of outsourcer Infosys Ltd. whose 1993 IPO introduced investors to an IT services industry that now has almost $200 billion in annual sales and made billionaires of its founders. “When these new start-ups convert their pole position to earnings and cash flow, their future is assured,” Nilekani said.

According to a PWC report, more than 50 % the total number of entrants who are new amidst the top 100 global unicorns included either internet software & services or fintech. Furthermore, with only 5 months left in this year, it will be fascinating to see how many more startups would be joining India’s Unicorn club.