About 60% of the 261 unicorn founders in India who built a startup valued at over $1 billion did so in their first attempt, while 29% took two attempts to reach that milestone, a report by research analytics firm PrivateCircle said.
India’s startup ecosystem has grown rapidly over the last decade, producing more than 100 unicorns. Over the last two years, however, as the global technology and risk investment ecosystem was hit by a prolonged downturn, the pace of unicorn creation in India also slowed down.
In the last two years, companies such as quick commerce platform Zepto, non-banking lender InCred, Ola founder Bhavish Aggarwal’s artificial intelligence startup Krutrim, and software-as-a-service (SaaS) fintech startup Perfios have attained a value of over $1 billion. In 2024, five startups — Krutrim, Perfios, Rapido, electric scooter maker Ather Energy, and fintech lending startup Moneyview — achieved unicorn status.
ET reported on September 5 that ride-hailing platform Rapido raised $200 million in a financing round led by existing investor WestBridge Capital, becoming a unicorn with a $1.1-billion valuation.
Digital payments startup Razorpay became a unicorn in October 2020 when it raised $100 million from a clutch of investors, including Singaporean sovereign wealth fund GIC and Peak XV Partners (then Sequoia Capital India and Southeast Asia).
“I try not to think too much of valuation. I’m sure it puts a certain pressure, but I think at the end of the day, you still try to do the right thing, which is to help grow the company in a sustainable and ethical manner,” Kumar said.
India is projected to have 150 unicorns in the fintech sector worth a total of $500 billion by 2030, with significant growth expected in payments, lending, insurtech, wealthtech, and neobanking sectors, as per a report by investment banking firm JM Financial and venture capital firm Beams Fintech Fund.
Currently, India is home to 26 fintech unicorns including PhonePe, Razorpay, Cred, Slice, Acko and Zerodha.
Venture capital firms and investors value founders who have previously faced failure and bounced back, seeing them as individuals possessing grit, adaptability, and the ability to pivot when necessary, the PrivateCircle report added.
“It’s not a function as much of a first time or second time founder but of macro hype cycles such as internet adoption, payment infrastructure etc. Building large businesses takes a combination of work and favourable momentum,” said Rajul Garg, founder and managing partner at early-stage venture capital firm Leo Capital.
Late-stage funding
Creation of unicorns has a direct correlation with late-stage funding, and with investors such as SoftBank and Tiger Global – who write large cheques turning startups into unicorns – being largely absent from the investment market, the pace of unicorn creation has slowed.
Late-stage investments in the July-September quarter totalled around $650 million, according to data from market intelligence firm 1Lattice. These were largely driven by the ecommerce and listing platforms sector including companies such as Zepto, hospitality startup Oyo and omnichannel jewellery retailer Bluestone.
This compares to $2.1 billion in late-stage funding during the April-June quarter, and $1.8 billion in the January-March period, as per the 1Lattice report.
Speaking at the Economic Times Startup Awards 2024 in Bengaluru on October 5, Peyush Bansal, founder and chief executive officer of omnichannel eyewear retailer Lenskart, said that sometimes founders get carried away with valuations – which may not be the best thing for the company.
The PrivateCircle report further shows that unicorn founders’ second companies achieved that status in a median time of 1.5 years, significantly faster than it took to build their first.
“When you become a unicorn, the public perception changes significantly. People look at you and treat you differently. Even within the company as well, as the organisation scales up, I think the company also needs to become more mature with scale, with size, while at the same time retaining the innovation and agility that help the organisation get to that point,” Razorpay cofounder Shashank Kumar told ET.
“Sometimes we as founders get carried away into raising valuations too much…it’s not the best thing for the company. I often found getting obsessed over valuations is the wrong thing for the company…because the Indian market is trading at multiples, which many international markets are not today. Those macro factors could change in times to come but that shouldn’t take away what we want to do,” Bansal said.
“Valuation should not be the founder’s job, our job should be to have our vision clearly on the impact that we want to create,” he added.
