Business

Unicorn boom fuels jobs, stakeholder value

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These unicorns—valued at more than a billion dollars each—include MakeMyTrip, InMobi, Paytm, Byjus, Cars24 and Ola, according to the Indian Tech Unicorn Report 2020 by Orios Venture Partners, an early-stage venture capital fund.

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While the financial payments sector accounts for most of the unicorns, retail and SaaS (software as a service) come a close second, the report said. Other verticals are logistics, data analytics, travel, food and gaming.

In 2020, a dozen startups, including Razorpay, PineLabs, Zerodha and Postman, joined the coveted unicorn club, the highest in any one year.

At $16 billion, Paytm continues to be the most valuable unicorn, followed by edtech startup Byju’s.

“The Indian startup ecosystem has generated tremendous value for founders, employees, investors and the economy. Most of these are backed by technology, and that is the key differentiating factor between unicorns of the 21st century versus the prior era,” said Rehan Yar Khan, managing partner, Orios Venture Partners.

Orios has invested in unicorns, including Ola, Druva and Pharmeasy, since their early days and aims to be part of another 3-5 unicorns over the next few years, added Khan.

As many as 41% of unicorns are from Bengaluru, followed by Delhi (34%) and Mumbai (14%).

“In fact, many former executives who have exited these successful startups have continued onto their second ventures and have become angel investors of some repute, bringing their experience and cheques to help grow the burgeoning ecosystem to help create the next unicorn,” said Ankur Pahwa, partner and national leader, e-commerce and consumer Internet, EY India.

The technology startup ecosystem continues to see a significant growth trajectory on the back of rapid digitalization and tech adoption.

“Startups are at the forefront of this widescale digital disruption. Segments such as edtech, healthtech, agritech, B2C (business-to-consumer) channels, social commerce, gaming and enterprise tech companies that are spurring the growth are just a few of the sub-segments witnessing double-digit growth and adoption, and are expected to bring in the next wave of unicorns,” Pahwa said.

This year is likely to see a rush of initial public offerings (IPOs) by startups this year, aided by improving profitability and scale in verticals.

While MakeMyTrip, JustDial and Naukri.com are the only unicorns to have been listed so far, many others such as food delivery startup Zomato, logistics firm Delhivery, Walmart-owned Flipkart and e-tailer Nykaa are expected to enter the public market this year.

“E-commerce companies are also looking to go in for public listing (either in India or overseas) to help tap the interest and growth that they are generating. Expect more news and traction regarding companies tapping into this funding channel in the next 12-24 months,” added Pahwa.

The average time period of eight years for a startup to become a unicorn is now reducing as global investment and capital become more accessible, among other things, the report said.

Startups such as Naukri.com and MakeMyTrip, which were founded pre-2005, took over 14 years to become unicorns, while Zomato, Flipkart and Policybazaar took 8.7 years. Nykaa and Oyo have taken even less time at 5.8 years, while Udaan and Ola Electric have taken only three years to achieve a valuation of a billion dollars.

Industry body Nasscom in January said that at least 12 unicorns will be created in 2021.

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