Despite the current trade wars and the impending global recession, India is emerging as a forerunner in terms of producing startup unicorns.(unicorns are privately held startups with more than a US$ one billion in terms of valuations.)
Just in the first half of 2019 , India has already produced 8 such entities and 17 were produced in 2018. The numbers are expected to rise based on intel with another 14 more in the next 6 months and perhaps more than 33 next year as these soonicorns have already been identified and to date they jointly have about US$ 11 billion in capitalization.
Some of the Unicorns created these year include entities like Big Basket, Rivigo, Delhivery, Software Firm Druva, Dream11, Icertis, Citius Tech and Ola Electric.
India’s coveted club of unicorns-firms in total are valued at over US$ 125 billion. The latest to join the list was Icertis. Icertis became a unicorn a two weeks ago when it raised $115 Mn in a funding round led by US-based venture capital firm Greycroft and PremjiInvest. Existing institutional investors including B Capital Group, Cross Creek Advisors, Eight Roads, Ignition Partners, Meritech Capital Partners and PSP Growth also participated in the round. Current valuation of Icertis stands at US$ 1.1 billion.
Icertis was founded in 2009 and helps enterprise clients increase their compliance metrics, improve management processes and overall productivity. Icertis clients include companies such as Google, Microsoft, Daimler, Airbus, Johnson & Johnson, Lupin, Infosys, Wipro and Cognizant. In industries such as pharmaceuticals, it already has five of the top seven players as clients. The company is aiming to sign up the top 2K firms globally and is targeting a revenue of around $100 Mn this year. Icertis says it is looking to continue its three-digit growth rate for revenue in the foreseeable future.
The other unicorns created this year include grocery startup Big Basket, trucking logistics firm Rivigo, ecommerce logistics firm Delhivery, software firm Druva, fantasy gaming startup Dream11, IT healthcare firm CitiusTech and Ola Electric, the electric vehicle arm spun off from ride hailing startup Ola, itself one of India’s earliest unicorns.
Just halfway through the year, the list of unicorns created this year is at par with all of 2018, which was a record breaking year too, with hotelier Oyo Rooms, insurer Policybazaar, food delivery firms Swiggy and Zomato, online retailer Paytm Mallsoftware firm Freshworks, payment firm Billdesk and business-to-business marketplace Udaan all becoming unicorns. Of the 46 unicorns in the country so far, 17 have been from 2018 alone, indicating the surging number of scalable firms, according to data from Thailand Startup News.
Investors such as Tiger Global, Softbank and a variety of Venture Capitalists etc. with deeper pockets, riskier appetites, patient timelines now chasing opportunities in India on the back of early successes (Flipkart exit). Their confidence also comes from parallels on timing on trends and growth of equivalents in other economies, potentially betting on riding a similar trend in India. This in turn leading to more capital available at earlier stages given there is more visibility into potentially meaningful exits.
The potential pipeline for unicorns in India also looks strong, with dozens of firms currently raising funds at unicorn valuations, or startups which are currently valued at over US$500 million. These startups are emerging from well-heeled sectors such as ecommerce, fintech and logistics, as well as newer sectors such as content, social commerce and mobility. The healthcare segment is also once again seeing a revival after being one of the initial pioneers in the startup scene.
The state of India’s startup ecosystem has a lot to do with efforts of these early unicorns, startups which bore significant market development costs. Adding to this, hugely favourable macro changes, capital supply and the maturing consumer, and it results in a growing unicorn factory.