2018 In Review: What Were Indian Unicorns Up To This Year?

This article is part of Inc42’s special year-end series — 2018 In Review — in which we will refresh your memory on the major developments in the Indian startup ecosystem and their impact on various stakeholders — from entrepreneurs to investors. Find more stories from this series here.

When the funding winter of 2016 struck India, it was expected that venture capitalists (VCs) would tighten their pocket strings and bring the sky-rocketing valuations of startups back to earth. But this phase of market correction lasted only a year.

Come 2018, giant international conglomerates such as SoftBank, Tencent, and Alibaba were back with a bang, signing off big, fat cheques to startups, making India home to 26 unicorns with maximum attaining the unicorn tag in 2018.

While the entry of blockbuster startups like Paytm Mall, OYO, Swiggy, BYJU’S in the group of Indian unicorns was par for the course, the silent but bold entry of 26-month-old B2B ecommerce startup Udaan into the billion-dollar club took many by surprise. After raising a $225 Mn funding round from DST Global and existing investor Lightspeed Venture Partners’ global fund in September 2018, Udaan became the fastest unicorn in India, ever.

For the most part, this was a busy year for the Indian unicorn club, chock-a-block with never-ending controversies, killer strategies, surprise acquisitions, valuation upheavals, and leadership restructuring. And just when we thought we were drawing the curtains on an action-packed year, BYJU’s threw 2018 a parting surprise by becoming the fourth most-valued unicorn in India after Paytm ($10 Bn), Ola ($4.3 Bn), and OYO ($5 Bn) with a valuation of $4 Bn (INR 28,918 Cr).

As part of special Inc42’s year-ender series — 2018 In Review — we bring to you the eight Indian unicorns that made the most buzz in 2018 and also tell you what they were up to.

Flipkart: Of New Beginnings And A Breakup

The fabled partnership of two friends, IITians, and businessmen — Sachin Bansal and Binny Bansal — who created India’s ecommerce star and $22 Bn unicorn Flipkart came to an end this year. But not without some drama.

After the $16 Bn acquisition of Flipkart by US retailer Walmart and a string of controversies, the two cofounders resigned from their respective positions in the company — Sachin as part of the Walmart deal fine print and Sachin under a “personal misconduct” charge.

Flipkart is now going through a major restructuring exercise at the senior management level. As the two fashion subsidiaries Jabong and Myntra get merged, the latter’s CEO, Ananth Narayanan, is speculated to have resigned from his position. Heavy layoffs at lower levels were also reported.

Under the leadership of CEO Kalyan Krishnamurthy and senior Walmart executives, Flipkart is sharpening its strategies to battle with Paytm Mall (which became a unicorn this year) and Amazon India — the two key claimants for the top position. At the same time, Walmart is preparing to take Flipkart global and looking to sell Myntra’s products in Canada.

Overall, the deal hit a chord with all stakeholders including consumers, offline retailers, investors (who are still cashing out their equity stakes to rake in billions) as well as other cofounders, who’re learning from Flipkart’s mistakes.

In 2019, Flipkart will look to improve its profitability matrix, with an eye on its IPO in the next few years. However, the founders will certainly be missed.

Paytm: A Year Of Mostly Highs And Some Lows

After the acquisition of Flipkart by Walmart, Paytm has become the most-valued unicorn in the Indian startup ecosystem. In January, the digital payments company touched the decacorn ($10 Bn) mark, making an epic start to the year.

Since then, founder Vijay Shekhar Sharma has been out of breath growing and expanding his company in all possible directions — from launching varied products (Paytm Money, Paytm Insurance, Partner Network Insurance), adding new features (Tap Card, My Payments, Paytm Inbox), fighting battles of market dominance, making acquisitions (TicketNew, Cube26, Balance Technology), and even investing money in startups (Creditmate).

Paytm even took its offerings to Japan with a digital payments product called PayPay in collaboration with Softbank. However, the biggest milestone for the company this year was bagging a $300 Mn fundraise from the Warren Buffett-owned Berkshire Hathaway — the firm’s first direct investment in India.

Until the last week of October, Paytm seemed like an unstoppable, invincible force, when suddenly it caught the evil eye.

First, in May, an investigative news agency named Cobrapost released a 13-minute-long sting video which showed Sudhanshu Gupta, a VP at Paytm, and founder Vijay Shekhar Sharma’s brother Ajay Shekhar Sharma, also a senior VP, saying that the company had shared its data with the Prime Minister’s office without users’ consent.

Later, in November, the media was stormed by reports of Sharma and his family being blackmailed by Sonia Dhawan, Sharma’s former secretary and VP, corporate communications and public relations, at Paytm. Her husband Roopak Jain, another Paytm employee Devendra Kumar, and Rohit Chomal were named as her accomplices. The accused reportedly stole some “sensitive, personal” data from Sharma’s computer and were trying to extort $2.71 Mn (INR 20 Cr) from him. The case is still on.

On the business front, however, Paytm is still playing its game right and is giving a tough fight to players like PhonePe (Flipkart’s digital payments subsidiary). With a new year around the corner, we expect Paytm to gather some positive vibes soon.

OYO: Making Room For Growth On Foreign Shores

OYO started the year 2018 with a good omen. In February, the court ruled in favour of OYO in its case against ZO Rooms. For the uninitiated, in 2016, OYO had signed a term-sheet to acquire the assets of budget hotel room aggregator ZO Rooms. However, after a long delay, OYO called off the deal. In February this year, OYO filed a criminal case against ZO Rooms, alleging continuous inconvenience and harassment by Zostel founders.

The following month (March), OYO shook hands with MakeMyTrip (MMT) after a gap of two years, resulting in the delisting of arch-rival Treebo from the MMT platform.

Since then, the Ritesh Agarwal-owned OYO has been leading the Indian (and global) hospitality chart.

OYO’s biggest POA (plan of action) this year seemed to revolve around making its way into international markets. To this end, it made acquisitions and entered new segments as well.

OYO marked its entry in seven countries — China, the UAE, the UK, Indonesia, Spain, Portugal, and Japan — with an aim to add 50K rooms each month and have 2.3 Mn rooms by 2023. As of now, the company has 3.3 Lakh rooms in 500 cities across the world. Surprisingly, its largest and fastest growing business is in China (1.8 Lakh rooms in 265 cities), where it entered almost a year ago.

OYO also made three acquisitions (Novascotia Boutique Homes, AblePlus, Weddingz) and took a plunge in the events industry with the launch of OYO Auto Party, a separate platform that provides banqueting and wedding planning services to its customers.

Two quarters down the year, the company added another feather to its cap with a $1 Bn round in September at a whopping $5 Bn valuation, making it the second highest-valued unicorn in India.

While moving towards the close of a successful year, OYO also gifted its team with 2,000 stock options, which were added to its Employee Stock Ownership Plan (ESOP).

Nicely played Ritesh Agarwal!

Ola: Driving Into New Horizons

Cab aggregators in India have come to share a love-hate relationship with their driver-partners and even customers. You can’t live with them, you can’t live without them!

This year too, Ola maintained its track record of controversies. Its tussle with drivers in different states (Karnataka, Gujarat, Mumbai) and driver-passenger issues continued. Ola was even caught in the midst of crimes such as a driver’s murder, the sexual assault on a passenger by a driver, and the kidnapping of a driver.

However, this did not deter Ola cofounders Bhavish Aggarwal and Ankit Bhati from implementing their plans to scale the startup. And scale it did!

Ola might be facing a mix of good and bad days on its home turf, but it’s now a hard fact that Ola has beaten Uber in India, to the extent that in March, the air was rife with speculation on the possible merger of Uber India with the local cab aggregator.

Ola even stormed into its arch rival’s global territories — the UK, Australia, and New Zealand — with an aim to touch 50 international cities by 2019. On one hand, it strengthened its tech backbone with the acquisition of public transport commuting and ticketing app Ridlr, and on the other, it integrated its online food delivery service Foodpanda with its ride-hailing app. Foodpanda’s acquisition of HolaChef in October proved to be a cherry on the cake here.

Also, Aggarwal has a keen sense of foresightedness and an ability to learn from the mistakes of his peers. This year, he learnt well from Walmart’s take over of Flipkart and the subsequent exit of both the cofounders from the company. As a result, the Ola founders worked on reserving the remaining equity stake of the company, thereby raising money for expansion via buyback of shares through different routes such as secondary share sale and ESOPs repurchase.

Ola is currently chasing its dream of attaining profitability. Also, the founders have now taken charge of two different ends to meet their target. While Bhati is looking after local operations, Aggarwal is handling the international front.

Zomato: Of Acquisitions, Growth, And A Viral Video

As always, restaurant search and food delivery unicorn Zomato had an eventful year, full of spice and all that’s nice (for the most part).

From a valuation markup to new features to glittery financials — Zomato touched all possible highs.

However, what came as a shocker for the Indian startup ecosystem was the resignation of cofounder Pankaj Chaddah, who left after spending 10 years at the company. Zomato also shut down its cloud kitchen vertical this year.

The company took the acquisition route to strengthen its delivery fleet, notching up deals such as TongueStun ($18 Mn) and drone startup TechEagle.

After crossing a $1 Bn GMV target in October and grabbing more than $410 Mn across two rounds of funding, Zomato is now focusing on consumer and environment-related matters. This includes introducing recycled packaging material, display of fire safety licenses of restaurants on its platforms, surgical strike on fake reviews as well as restaurant delisting in line with the Food Safety and Standards Authority of India (FSSAI) guidelines.

However, just as Zomato was going to wrap up the year as a successful one, a video showing one of its delivery executives eating food out of boxes to be delivered went viral. Zomato responded swiftly to the crisis, removing the man from its delivery fleet and saying it would soon introduce tamper-proof tapes to ensure such an incident doesn’t occur again.

Thus, in 2019, the company’s first target will be to make its food orders tamper-free and impart proper training to its delivery executives. In the long term, Zomato is looking to tap the offline segment with Zomato Events, wherein it will introduce a multi-city food carnival — Zomaland.

Swiggy: A Finger In Every Pie

The rivalry between Zomato and Swiggy is an open secret. This is reflected particularly in the manner the duo race each other to raise funds and launch new products and features. With Zomato strengthening its game in 2018, Swiggy wasn’t going to take any chances.

Starting out with a $100 Mn funding in February, it tried to stay a step ahead of its competitor all year. To this end, it launched new features such as a meal planner named Swiggy Scheduled, a loyalty programme called Super and a Swiggy Packaging Assist Programme for its restaurant partners. It also piloted its B2B food aggregation programme Swiggy Cafe.

The icing on the cake was a $210 investment in June from Naspers and GST Global, which enabled the company to enter the Indian unicorn club with a $1.3 Bn valuation. Grabbing more than $300 Mn in its bag this year, Swiggy is now looking to test the waters in the hyperlocal segment, starting with medicines and grocery deliveries. It also plans to offer UPI-based digital payment solutions to its delivery partners.

Apart from a short delivery partner strike in Chennai earlier this month, Swiggy seems to have had smooth sailing for most of 2018. It also acquired on-demand delivery platform Scootsy in August this year to improve its delivery fleet. Analysts say there are further acquisitions on the card for Swiggy in 2019, especially considering Zomato’s latest acquisition of drone startup TechEagle.

Let’s hope Swiggy can get off to a flying start in the new year with Zomato planning drone deliveries of its food orders soon.

Freshworks: Leading The Way For SaaS Startups

Chennai-based B2B software-as-a-service (SaaS) company Freshworks grew in all possible directions this year — from products (it added five more to its existing suite) and team size (reached 1300+) to valuation ($1.5 Bn) and growth rate (crossed $100 Mn ARR in June).

Even as others in the ecosystem were trying to figure out the secret sauce of Freshworks’ spiralling growth rate, it went and became a unicorn in July.

Nothing can be more delightful for a SaaS consumer to get all his troubles sorted on one platform. With a view to enhance and streamline the customer experience, the company also launched a plethora of new launches this year: Freshworks360, Freshconnect, Unified Marketplace Platform, Freshping and Freddy.

Scaling locally as well as internationally in places such as the Middle East and South Africa, Freshworks also opened a data centre in Sydney at the start of the year. It later announced the launch of another such data centre in Mumbai.

Freshworks has become a SaaS startup with MNC presence and a unicorn in just over eight years (it was founded in 2010). Freshworks CEO Girish Mathrubootham is considered a demigod of the Indian SaaS industry. Apart from running his own blockbuster unicorn, he also mentors and have invested in startups such as Fyle and Turms.

He, in turn, looks up to Thalaiva (meaning leader or boss in Tamil, referring to veteran actor Rajinikanth in this case), “because there are a lot of values, humility”. He is also enamoured by Amazon chief Jeff Bezos as “when running a company at that scale, he can still pull out innovations like AWS.”

Snapdeal: Rising From The Ashes

In April 2017, the ecommerce industry witnessed the fall of a unicorn that was once valued at $6.5 Bn. But soon after, it was resurrected by founders with an iron will.

After the failed merger with Flipkart, they launched Snapdeal 2.0 last year, turning around the company’s fortunes and becoming cash flow positive in mid-year. Not only this, the company claimed to cut its losses sharply in fiscal 2018, posting a loss of INR 613 Cr in 2017-18, down 87% from the previous fiscal.

According to media reports, Snapdeal has grown its order volume four-fold in the past 10-12 months, from a low of 35,000 daily orders in August last year. It now claims to be shipping 150,000-175,000 orders a day. Earlier this month, it also claimed to have added 50K sellers on its platform in the last 12 months.

Snapdeal also introduced a number of new programmes for all its stakeholders, including the option of an instant signup for sellers, Brand Shield, an anti-counterfeiting programme for brands, and even an online wedding store for its consumers.

Welcome To Unicorn Land

With maximum startups making to the Indian unicorns club this year, it lost a bit of its mythical sheen and seemed to become more accessible to your average startup.

So, what changed in 2018 to facilitate the emergence of so many $1 Bn+ startups? Basically, the investor mindset.

While, earlier, the Indian market was a dumping ground of funds for deep-pocketed investors with an eye on the long-term, in 2018, investing became associated with the prospect of good exits as well as the possibility of future collaborations among existing portfolio companies.

Some investors also reached a point of obligation (or ego) in acquiring a controlling stake in leading startups in some of the hottest segments, even if it came at a heavy price. The $8 Bn+ investment by Japanese conglomerate SoftBank (triggered after the failed Flipkart-Snapdeal merger in 2017) in consumer internet companies such as Flipkart, OYO, Ola, and Paytm, among others so far, is a prime example here.

Let’s hope the investors keep investing and India keeps producing more unicorns. Meanwhile, here’s wishing a successful 2019 to all our existing unicorns.

[Edited by Prakriti Singhania]