Explained: What Are Unicorns And How Start-Up Ecosystem Is Expanding In India

A recent report said that India to have 122 unicorns in the coming 2-4 years.

Hurun Research Institute and ASK Asset & Wealth Management conducted a study, that showed future unicorns of India, namely, Shiprocket, Zepto, Turtlemint, Pepperfry, and Juspay recorded a 36% jump in value compared to last year. Most of them are currently worth $49 billion.

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The report is a ranking of privately held Indian startups, founded after 2000. They are worth at least $200 million and are expected to turn unicorn in the next 2-4 years. 17 startups classified by Hurun are expected to attain unicorn valuations in the next 2 years. These are Shiprocket, Zepto, Turtlemint, Ather Energy, Vivriti Capital etc.

What are Unicorns?

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Unicorns are privately held startups that have reached a value of $1 billion or more. Their valuation is based on their growth potential as perceived by investors and venture capitalists but not on their current financial performance.

They offer creative solutions, new business models, etc., and have several categories like fintech, Edtechs, B2B (Business-to-Business) companies, etc.

Aileen Lee, an American venture capitalist coined the term in 2013. The term was used to emphasise the rarity of the emergence of such startups.

India and start-ups

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India is the third-largest start-up ecosystem in the world. The US tops the list followed by China. By 2021, there were 83 Indian start-ups, that have achieved the status of a unicorn.

In the same year, the start-ups of India raised more than $23 billion and 13 more startups are added to the unicorn club in 2022.

At present, India is recording rapid growth in the number of startups. According to Forbes, with a total valuation of $82.1 billion 42 unicorns emerged in India's startup ecosystem in 2021.

Since 2012, the number of cumulative start-ups has increased at a CAGR of 17% and crossed 1,12,000, as per the India Venture Capital Report 2021 published by Bain and Company,

Bengaluru is the unicorn startup capital of India

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With 46 probable unicorns, Bengaluru is the unicorn startup capital of India followed by Delhi-NCR (25) and Mumbai (16). Around 21 Indian future unicorns have overseas headquarters including the US, Singapore and the UK.

Hurun¡¯s potential unicorn list featured 15 startups led by women and Pratilipi is the only company in the index with two women co-founders.

As per the Hurun index, 19 years old Kaivalya Vohra, co-founder of gazelle Zepto, is the youngest startup founder and 61 years old K Satyanarayana, founder of Ecom Express is the oldest founder.

The start-up ecosystem is expanding

Hurun Research Institute and ASK Asset & Wealth Management study showed that the future unicorns are focussing on various sub-segments including financial services, logistics, healthcare and education primarily.

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Anas Rahman Junaid, MD and chief researcher, Hurun India said that ¡°While compiling the ASK Private Wealth Hurun India Future Unicorn Index 2022, we discovered that the country¡¯s start-up ecosystem is expanding at an unprecedented rate. In just one year, the number of unicorns has increased by 65%¡­Probably, the pandemic has accelerated the disruption of traditional businesses and fostered the emergence of startups. The ecosystem is gradually attaining the requisite maturity and resilience.¡±