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India is the 3rd largest Unicorn hub in the world – What made this happen?



In 2021, India had a record number of start-ups become unicorns, surpassing the United Kingdom to become the third-largest Unicorn country in the world.


Requirements For A Start-up To Become A Unicorn?


In the venture capital universe, a unicorn is a privately owned start-up that has a market capitalization of more than $1bn.

  • The start-ups with a valuation of more than $10bn are referred to as Decacorn (or a super unicorn).

  • A unicorn start-up is not always a successful start-up. The word "unicorn" is attached to a company's market valuation and not to its market dominance.

India's Unicorn Ecosystem


With over 58,000 DPIIT (Department for Promotion of Industry and Internal Trade)-recognized firms, as of Nov 2021, India has emerged as the global start-up ecosystem.

  • Over 2015-21, the Indian start-up ecosystem has flourished at an accelerating rate:

  1. The number of investors has shot up by 9x.

  2. The overall amount invested in start-ups has increased by 7x.

  3. The number of incubators has ballooned sevenfold.

  • As of Dec 2021, India has 79 unicorns, with a combined valuation of $260.5bn.

  • As many as 42 start-ups (and counting) turned unicorns in 2021 alone.

  • Currently, Bengaluru is called India's unicorn capital, followed by Delhi (NCR) and Mumbai.

  • According to The Indian Express, Bengaluru-based ed-tech firm, Byju's has been valued at $21bn, making it India's most-valuable unicorn and the world's 13th-most valuable start-up.

What Makes India A Flourishing Hub For Unicorns?


Today, one out of every ten unicorns in the world are in India. Overall, 2021 saw an exponential increase in the number of firms joining the unicorn club.

  • Prime Minister Narendra Modi said on Mann Ki Baat that India has transformed into a nation of job creators rather than job seekers, celebrating a recent spike in start-ups turning unicorns.

  • PM Modi's "Make in India" initiative has become a confidence booster for Indians to take initiatives to build a start-up.

  • The factor that sped the success of the Indian start-up ecosystem was the recognition of start-ups as an asset class. As a result, the industry has attracted both attention and moolah from a more extensive and diversified set of investors, including retail investors.

  • SaaS (Software as a Service) has also become a popular investment area; therefore, a lot of money is available. The Indian start-up ecosystem has exploded because of the pandemic-driven surge in e-commerce, the rapid shift of enterprises to online, and the demand for innovation, reportedly.

Impact On The Indian Economy And Future Prospects

  • PM said that it is a turning point for India's growth, strengthening India's stature on the global stage. Start-ups and unicorns are greatly contributing to the Indian economy. As per the initiative taken by the finance minister and PM to make India a free economy, the start-ups are getting registered for IPOs by taking SEBI's nod. Debuting on the stock market is a budding trend in the start-up ecosystem, which has great potential of contributing to India's economic development.

  • Currently, Zomato, Nykaa, PolicyBazaar, Paytm are among the notable unicorn brands that have issued an IPO. Many more are in the pipeline, including Delhivery, Mobikwik, and CarDekho.

  • The start-up culture can receive a flip if the government relaxes its regulatory compliances and rules for a start-up going public. According to KR Sekar, Partner, Deloitte India, "India's demand and consumer base are enormous, and a stronger network and better telecom legislation would help start-ups thrive even more."

Are these start-ups, IPOs, etc., poised to make India a $5 trillion economy? Only time will tell.



References:


  1. NDTV

  2. The Hindu

  3. Invest India

  4. Onmanorama

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