Will 2024 Bring Back The Unicorns?

The first half of 2023 remained devoid of any new unicorns in India, casting a shadow on the startup landscape. However, the narrative took a positive turn with Zepto, a quick home delivery commerce app, and InCred Holdings Limited, the holding company of fintech startup InCred Financial Services Ltd becoming the unicorns of the year. While subsequent months did not witness the birth of additional unicorns, Zepto and InCred’s achievement stands out as a noteworthy milestone.

Having said that, we have witnessed diminishing unicorn numbers in India, a phenomenon observed over the past few years. In 2021, a remarkable 45 Indian startups achieved unicorn status, reflecting their rapid growth and promising market potential. This figure, however, reduced to 22 in 2022.

There were several factors behind the decline in the number of unicorns in India which cannot be ignored. There has been an economic slowdown globally and startups felt the tremors of this slowdown as investors became a little cautious when it came to startup investing. 

Interest rates have also been consistently rising and the economic recession has become an influencing factor in the decision-making process of investors. There were some supply chain and technological disruptions which made the environment a little hostile to the growth of startups. 

It was also observed that some startups had adopted unsustainable business models and practices which caused an adverse impact on their long-term growth. They faced financial instability and found it challenging to adapt to newer trends and patterns. 

Such startups also found it difficult to scale their operations which eventually led to inefficient use of funds and increased costs. 

What’s In Store For Indian Startups In 2024?

Notwithstanding the myriad challenges, Indian startups have embarked on the year 2024 with a sense of optimism and resilience, demonstrating a collective determination to navigate and overcome the hurdles in their path. 

As per the World Economic Forum, in the coming five years, India could ascend to the position of the third-largest global economy. This projection underscores the country’s potential for economic growth and development. Startups shall be playing a monumental role in this. 

Startups from certain sectors are expected to perform exceptionally well and occupy centre stage in the Indian startup ecosystem. If startups from these domains receive good funding, follow a sustainable and profitable business model, function under experienced and knowledgeable mentorship and keep advancing according to new trends in business and technology, multiple unicorns shall emerge. 

Startups in domains such as artificial intelligence (AI), virtual reality (VR) and augmented reality (AR), cybersecurity, fintech, edtech, spacetech, quick commerce, sustainable and clean technology and mental health can be seen as the beacons of hope for the Indian startup ecosystem in 2024. 

Startups from all these arenas cater to newer necessities and requirements and in a great way make lives easier. They also contribute to the enhancement of future technologies and lead to a better standard of living.  

Tech-related startups have also been performing well unfailingly. India is home to 68K+ tech startups and India’s tech startup ecosystem ranks third worldwide and has performed excellently in comparison to developed countries such as the UK and the USA. The conversion rate of Indian tech startups post Series B stage is 30% which is one of the highest in the entire world. 

India has the highest number of Science, Technology, Engineering and Mathematics (STEM) graduates and the second-highest number of accelerators and incubators. India’s tech startup ecosystem has reached a stage of maturity, evidenced by its ability to draw in over $102 Bn in cumulative funding from 2019 to 2023. 

This influx of capital not only serves as a testament to the ecosystem’s resilience but also signifies the growing recognition of India as a hub for innovation and entrepreneurial success on the global stage.

According to the World Economic Forum, throughout the year 2024, the global economy is expected to remain uncertain. But startups and their founders can anticipate positive economic growth and seize the opportunity to weather the storm and understand their strengths and weaknesses. 

Startups can utilise this year to raise funds strategically, build a customer-centric approach, diversify, focus on digital transformation, build strategic partnerships, invest in talent and acquire useful human resources, build financial and economic resilience and build a reliable and trustworthy network. 

All these factors shall be leveraged by the opportunities provided by and the initiatives taken up by the Government of India. Some initiatives that can be key to the growth of Indian startups are the Seed Fund Scheme, Fund of Funds Scheme, Credit Guarantee Scheme for Startups, MAARG mentorship platform, National Startup Awards, and the State Ranking Framework. 

Will 2024 Bring Back The Unicorns?

Based on the current landscape of Indian startups and the economic scenario as discussed above, the answer is hopefully yes. To make sure that the number of unicorn startups rises in India, several well-calculated and steps with a clear thought process need to be implemented involving the government, investors and startup founders. 

The past year shall act as a lesson and startup founders must analyse the successes and failures of startups in 2023 and study what all worked out and what all went wrong for startups. 

Primarily, significant strides in technology are driving substantial change. Innovations in artificial intelligence, blockchain, and virtual reality are reshaping industries, offering new avenues for startups to revolutionise conventional business models. 

These advanced technologies empower entrepreneurs to establish scalable, high-growth businesses with the potential to attain unicorn status.

Secondly, venture capitalists will play a pivotal role in shaping the success of the startup ecosystem in 2024. While it is widely acknowledged that VCs currently have significant capital reserves, the strategic deployment of these funds will be crucial for fostering a thriving startup environment this year. 

It’s noteworthy that, beyond providing capital, venture capitalists frequently contribute strategic guidance, industry expertise, and valuable connections when engaging with startups, thereby significantly enhancing the startup’s prospects for success

Lastly, favourable market conditions are critical to fostering the growth of startups. The global economy is gradually rebounding from past challenges, and consumer demand is on the rise. Startups that can leverage these market opportunities and offer innovative solutions stand a better chance of attaining unicorn status.

In conclusion, the convergence of technological advancements, available funding, entrepreneurial prowess, and favourable market conditions create a promising backdrop for the resurgence of startups in 2024. This marks an exciting era for the startup ecosystem, anticipating the emergence of innovative, impactful companies that captivate the attention of both investors and consumers.