India is now creating Unicorns More quickly than China

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Over the course of the last 20 months in the last 20 months, the Indian startup ecosystem has created 60% of India’s 105 unicorns

According to Economic Pitch ‘The Status of the Indian Startup Ecosystem 2022 The State of Indian Startup Ecosystem Report 2022’, India has 250 unicorns expected by the year 2025. which is second just to US

The unicorns of India are valued at $341 billion, and have raised $93 billion in funds over the past two decades.

India today has 105 unicorns. This number is predicted to grow by 140% over the coming three years. According to Economic pitch new report “The State of the Indian Entrepreneurship Ecosystem 2022′ India is expected to have 250 unicorns in 2025 which is which is second only to the US with 618 unicorns.

The research suggests that India is producing unicorns at a faster rate than any other nation around the globe, leaving China with more than 174 unicorns, to win the top spot. Israel closely is following India with the 96 unicorns it has and is close to reaching the three-figure threshold.

It is important to note that India produced almost 3-fifths (63) of the unicorns during the past 20 months. The 2022 year has yielded 19 unicorns which amounts to almost 44% of the unicorns born in 2021. The nation’s 105 unicorns are worth $341 Bn and have raised $93 Bn in capital in the last two decades.

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Indian Startups are Turning Unicorn Faster Than Any Time

Economic Pitch “The State of Indian Startup Ecosystem Report 2022′ shows it is the case that Indian startups are becoming unicorns in half the time after 2010 in comparison to the time it took their predecessors prior to 2010.

Thrasio-styled e-commerce rollups Mensa Brands (six months) and GlobalBees (eight months) had the fastest time to become unicorns, both hitting the $1 billion valuation threshold in just one year. In addition, 38 startups were unicorns in less than five years according to Inc42 information.

What Regulations Influence The Production Rate Unicorns

in the Mann Ki Baat program in May PM Narendra Modi praised India’s entrepreneurial ecosystem for generating 100 unicorns. Additionally Modi said that PM Modi declared that India’s unicorns are growing faster on average increase than those of the US as well as or the UK and other countries.

In the past three or four years, the Centre has worked with startups to create specific guidelines for rapidly evolving sectors like fintech and ecommerce. These sectors affect daily lives of billions of people each day.

Both of these sectors are the largest unicorn producers in the country . Three out of seven Indian unicorns originate from the e-commerce or from the technology sector. For example there is there is a report that the Reserve Bank of India (RBI) recently released new guidelines for the growing online credit sector. In addition, draft rules for e-commerce and draft guidelines for ecommerce are also in discussion.

sectors like deeptech as well as cryptocurrency are subject to the oversight of different regulatory bodies. But, cryptocurrency is in a regulatory gray area without any clear regulations from the government, which could impact VC financing for startups in India’s crypto industry.

An established regulatory system will ensure that consumers are protected and that startups do not have to modify their business model in order to comply with the new rules. The positive side is that regulators appear to be cognizant of this.

the Road Ahead

The year of 2013 proved to be an important year for the Indian startups which saw 11 unicorns such as Paytm, Zomato and Freshworks in the process of releasing their first open announcements (IPOs) and being listed on exchanges.

2022 also saw an excellent beginning, with the funding momentum that was seen towards 2021’s end being carried over. Indian startups received $11.7 Billion in the first quarter of 2021 and created 14 unicorns and reaching 100 unicorns in May 2022.

However, the momentum for funding was slowed down during the 2nd quarter in 2022. The Indian startups only raised $1.16 Billion during July of 2022 which was down by 90 percent year-on year (YoY) in July 2021, when Indian startups raised $11 billion in investment.

The ongoing conflict in Europe and the rising rates of inflation and tightening monetary policies that central banks are implementing have heightened the scepticism of investors and resulted in a drop in funding. This is known as the “funding winter”.

The negative outlook has led to the spotlight being placed on the financial viability of a lot of the unicorns, who despite expanding exponentially yet, still make losses. As a result some startups have resort to cuts to save money and expand their runway.

Decacorns (at the last valuation of private equity) like Paytm and Swiggy, Ola and Zomato have been caught in the sights of regulators. And none of them are profitable at the moment.

While there have been some concerns about the profitability and valuation metrics for Indian unicorns, the businesses certainly have had a significant impact on the Indian startup ecosystem. In addition, companies like Zomato along with Paytm are also talking about breaking even in the near the near future.

According to Inc42’s Uncovering India’s 100 Unicorns report These startups have generated over 3.8 Lakh jobs. Additionally, Indian unicorns have also witnessed 326 M&As in the past, enhancing the ecosystem and assisting investors in getting clear exits.

The technology-driven startups have established a solid base for the country to meet its target of having one trillion dollars of digital economic activity within 3 years.

Despite the brief setbacks however, the Indian startup industry appears to be on the right track to continue producing unicorns, which is an increase to the country’s goals to become an economic superpower.

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