India’s unicorn base six times smaller than that of US, China even as it remains third largest globally

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January 10, 2021 1:13 PM

Investors had put 21.3 per cent less risk capital in 2020 vis-a-vis the preceding year in startups amid Covid. Over $11.4 billion funding, down from $14.5 billion in 2019, was made in 2020.

Bengaluru was home to 41 per cent of Indian unicorns while 34 per cent were based in Delhi NCR. (Image: Bloomberg)

With 38 startup unicorns – internet first or internet-only businesses valued at $1 billion or more in the private market – active in India including 12 new ones, which were added in 2020, the country is the third biggest hub of such hallowed one-horned startups globally. In fact, India has been enjoying that position for the past few years now surpassing the United Kingdom. However, it has a very long way to go to be even in the vicinity of the second spot. The Indian unicorn base remains over six times smaller than that of the United States with 243 unicorns and nearly six times smaller than that of China with 227 unicorns even as the latter may knock the US off the top spot in the coming few years.

According to the data sourced from a recent Nasscom-Zinnov startup 2020 report, the US was the largest unicorn hub followed by China and India with the average time taken by companies to hit unicorn status being five-seven years in the US, six-eight years in China, and seven-eight years in India. While the Indian startup ecosystem is still in its infancy, evolving over the past 10-12 years, the ecosystems of the US and China have been in development over the past multiple decades with more mature innovation and technology bases. However, in terms of new additions in 2020, India added the second higher number of unicorns in 2020 with 58 per cent B2B additions after 66 unicorns added to the US tally while China added only eight. In the list of top unicorn hubs, the UK, Germany, and South Korea had 24, 12, and 11 unicorns respectively in 2020.

Also read: SoftBank’s 6 mega IPO bets in 2021 that might make Masayoshi Son demi-god for technology startups

There are more than 55 potential unicorns in the pipeline in India while there could be over 50 unicorns overall in India in 2021. “Despite lower investments than 2019 – India has added most Unicorns in a calendar year, ever. More importantly, many start-ups are already servicing global markets, with 60% being B2B – which is yet another record,” the report said.

Investors had put 21.3 per cent less risk capital in 2020 vis-a-vis the preceding year in startups amid Covid. Over $11.4 billion funding, down from $14.5 billion in 2019, was made in 2020, according to the data shared by Tracxn. However, the fall in annual deal volume or the number of rounds was less severe as startups participated in 1,152 funding rounds in 2020 vis-à-vis 1,185 in 2019. The investments in 2020 were led by $800 million raised by Byju’s followed by $700 million secured by Walmart’s PhonePe, and $660 million invested in Zomato across multiple rounds.

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