How Long Are Indian Startups Taking To Become Unicorns In A Post-Covid World?

Recently, Inc42 reported that Zepto could be on the path to becoming 2023’s first unicorn, ending the 11-month-long unicorn dry spell in the country after Tata 1mg entered the coveted club last September. 

Interestingly, the quick commerce platform, which is all set to raise $150 Mn in a Series E funding round at a valuation crossing $1 Bn, was founded in 2021. 

This piqued our interest and we couldn’t resist asking how fast Indian unicorns are bagging the unicorn tag presently.

In 2018, Udaan and Paytm Mall attained unicorn status within around two years of their launch. At that point in time, they were termed the fastest startups to achieve the unicorn status, with Apna in 2021, and Ola Electric in 2019 following suit. However, Indian startups have come a long way since then. 

Today, the Indian unicorn club comprises startups that became unicorns the very year they were born, according to Inc42’s latest report, “Decoding India’s Unicorn Club Report 2023”. 

A classic example in this context is Mensa Brands, which took merely six months to attain the $1 Bn valuation. Similarly, GlobalBees and 5ire took seven months and 11 months, respectively, to enter the coveted unicorn club. 

Further, many startups that were born in the last 2-3 years, when the capital inflow in the world’s third-largest startup ecosystem was at an all-time high, proudly wear the unicorn sash today.  

According to the report, of the 110 unicorns in India, around 15% took somewhere between three and five years to become unicorns. Some of the names in this list include Pristyn Care, CoinDCX, Bharatpe, and MPL. 

Also, 73.6% of unicorns took more than 5 years to cross the billion-dollar valuation mark. Startups such as Unacademy, Mamaearth, Moglix, and PhonePe are some of the examples that fall on this list.

Seemingly, the average time taken for Indian startups, which were incorporated post-2016, to become unicorns has dropped 81% to 3.5 years as compared to 18 years taken by startups that were founded before 2006. 

Here Are Some More Interesting Facts:

• The startups that were incepted before 2006 took an average of 18 years to become unicorns. Pine Labs and IndiaMart are the two prominent examples.
  
• The ventures that were born between 2006 and 2010 took an average of 8 years to enter the unicorn club —  Freshworks, Delhivery and BigBasket are a few examples.
  
• Startups that were established between 2011 and 2015 took an average of 6.4 years to win a billion-dollar valuation. Blackbuck, ElasticRun and The Good Glamm Group are some noteworthy names in this category.
  
• Startups that came into existence after 2015 ended up with the unicorn tag in just 3.5 years on average, with names like Ola Electric, CRED, MPL and Zetwerk becoming unicorns in less than three years.
  
• Startups founded post-2019 achieved the billion-dollar valuation in three years or less – OneCard, Apna, Mensa Brands, 5ire and Globalbees are the only unicorns to have achieved this feat. 

What’s Next?

The Indian startup ecosystem is going through a slow phase, as startups recuperate from the funding winter and a global macroeconomic slowdown. After minting a record 45 unicorns in 2021 and 22 unicorns until September 2022, the country has failed to see any new unicorns in the last 11 months.

While startups entering the unicorn club is an achievement, profitability still remains a distant dream for many. Out of the 74 Indian unicorns analysed by Inc42 in the report, 55 startups incurred cumulative losses to the tune of $6 Bn in FY22.

However, there is still a silver lining amid the doom and gloom. Over the past quarter, several Indian unicorns have finally managed to turn a profit. The likes of Zomato, Meesho, Info Edge, and Mobikwik have either hit their first-ever profitable quarters or made a return to profitability. 

With many others claiming to be knocking on the profitability door, it seems likely that the lost charm of India’s blessing of unicorns will return soon. Amid this, all eyes are on the country’s next unicorn

At a time when the ongoing funding winter has forced many new-age ventures to shift their focus from growth at all costs to becoming profitable, there is a growing possibility that the country’s unicorn-making machine will chug along at pre-Covid levels. Even so, India is slated to mint more than 280 unicorns by 2030, as per Inc42 projections.

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