The journey of Indian startups from launch to unicorn status has dramatically shortened over the past decade, indicating investors’ confidence and an evolving ecosystem. While startups launched after 2007 took an average of 6.7 years to enter the billion-dollar valuation club, the time-period has consistently shortened, particularly after 2013, according to the data from business intelligence platform Tracxn. 

The time taken by Indian startups since 2014 to achieve the unicorn valuation has declined to around 4.9 years – an astonishing drop of 48 per cent compared to the average 9.4 years taken for startups launched between 2007 and 2013. 

For instance, launched in 2014, Swiggy took four years to become a unicorn. Others also such as online B2B marketplace Udaan, founded in 2016, took two years to achieve the billion-dollar valuation, Glance.com took one year, godigit turned unicorn in five years, Cred achieved the milestone in three years, Dealshare entered the unicorn club in four years, etc., showed data from Tracxn.

In comparison, startups founded before 2014 such as Quikr took seven years to become unicorn, Zomato and PolicyBazaar achieved the status in 10 years, Freshworks, Delhivery, and Bigbasket hit the milestone in eight years, OYO took six years, MobiKwik and Upstox achieved the unicorn status in 12 years while Uniphore and Amagi entered the club in 14 years.

Real-time credit decisioning platform Perfios took 16 years, the longest to become a unicorn. 

What’s driving the rise

The drop in time period here can be ascribed to multiple factors such as growing investor trust, rapid adoption of technology among consumers and an expanding base of consumers. Moreover, India has positioned itself as a major centre for digital innovation over the years, encouraging startup investors to focus on the domestic market, boost expansion of new age businesses and consequently push private market valuations to the billion-dollar status. 

“This decline (in time taken to become unicorn) is primarily due to the rising confidence of investors globally in the potential of the Indian startup ecosystem over the years. The rapid adoption of technology such as digital payments, AI, and growing internet access has established India as a huge market for digital solutions and investors are readily investing in innovative startups,” Tracxn told Financial Express Online in response to a query on average unicorn time for startups. 

Moreover, the pandemic-driven market boom in the country also led to investors infusing substantial capital into companies, leading to skyrocketing valuations and unicorn creation. 

Period of recalibration

The ecosystem, however, is now going through a period of recalibration on the back of the macro environment globally marked by rising interest rates and concerns around inflation and liquidity, turning investors more cautious. The current market scenario prioritises profitability and the bottom line along with sustainability in business models, unlike the past few years when startups had almost unbridled access to growth capital based on their future potential. 

“Recent market challenges caused by macro-economic headwinds have decreased the number of unicorns being created as startups are prioritizing profitability over chasing valuations,” according to Tracxn. 

As a result, a number of entities becoming unicorns in 2024 took around 10 years to enter the club. For instance, digital platform for lending management Moneyview achieved the unicorn status in 10 years, Ather Energy hit the unicorn valuation in 11 years, Rapido achieved the unicorn status in nine years while truck booking platform Porter became unicorn in 10 years.

Despite the current trends, the time period for startups to enter the unicorn club remains significantly lower in comparison to the pre-pandemic scenario. Importantly, startups with a focus on fundamentals, unique offerings, and clear value propositions are able to raise capital and become unicorns. 

For example, the 10-minute delivery platform Zepto, founded in 2020, turned unicorn within three years. Similarly, Krutrim – an AI startup by Ola founded in 2023 became unicorn in a year. 

The Indian startup ecosystem is currently home to 116 unicorns, with the maximum count of 43 billion-dollar startups recorded in 2021. The criteria to achieve the unicorn status is expected to evolve further as the ecosystem matures and the growth-at-all-cost strategy wanes gradually. On the investors’ side, the growth in India’s unicorn count is expected to continue ahead, provided the investors’ confidence remains intact in Indian startups focusing on real-world challenges with sustainable and scalable models.