Recently we are witnessing the great Indian unicorn rush, those companies which have been making headlines at the Startups who received large funding and have finally entered the Billion-Dollar Club. In fact, the investors including Softbank, Tiger Global and Falcon Edge are pouring money into Indian Startups churning out unicorns at a record speed and valuations. India is now home to 79 unicorns i.e. Startups valued at 1 billion US dollars or more. 42 of these have entered the coveted club this year itself with 5 of them cutting the last few weeks. Many of these 42 unicorns which have cumulatively raised more than 9 billion dollars to date have also seen a surge in their valuations. The growth of unicorns in India has been phenomenal in the past 2 years from 17 unicorns in 2018, the number went up to 38 in 2020 and it’s now 79 in 2021. Analysts say that the Covid pandemic accelerated the adoption of digital services by consumers helping Startups and new-age ventures that typically build tech-focused businesses delivering an array of offerings to customers. Many Indians who had traditionally been subscribers of brick-and-mortar businesses moved online and explored a host of services ranging from food delivery and agitech to e-grocery. This added a significant number of consumers to the Startups base and expedited their business expansion plans also, in turn, attracting investors.
The seeds of a potential boom of the unicorns in this country were sown a few years ago with the kind of an initiative that the government took by laying out a policy framework that would enhance the adoption of startups in this country using technology. Having said that, the Covid of course expedited the sharp growth that we see in the last 2 years. The Covid meant that you’re not stepping out of home, you’re working from home so your access to the physical world is limited therefore in that kind of environment the startup ecosystem is reliant on technology and delivery of goods and services through the technological online mode got a boost. That’s number one and number two is creation of a strong unified financial payment online backbone which has led to, in my view the largest and the highest adoption of financial payment system in the world. In India, it is 85 per cent where the global average is 65 per cent, the financial adoption of a fintech in the country has been the highest.
Number three is the increasing base of smartphone users in this country. Today there are about 550 million people who are using smartphones and if you compare that with around 640 million Internet users, we can see what is the preponderance of using smartphones for accessing the Internet. There’s a huge market there, which meant that many of these startups and unicorns are using the smartphone as a medium. The big reason why the unicorns have grown is the digital model as a preferred model of business that is being embraced not just by the startup companies but also by the physical companies therefore there’s a spread of the digital model of business and that has meant the adoption of unicorns that out of these 42 unicorns that have been born in this calendar year itself 7 are a fintech company.
New age consumer who is keener today to access goods and services with the swipe of a screen or a click of a button, that’s the new age millennial consumers who are coming up, who prefer to have everything in more digitally accessible form. The startups have leveraged that space but the fact is that everybody is thinking ‘if I go digital my job is done, if I create an app it is done’. So, the journey towards the unicorn is not carrying that one single idea but building on it over time to reach that stage because most of it is not rocket science but most of it is fabulous smart thought therefore conversion of the need and the thought is what is triggering startups today and youth to come up with ideas. Today everybody wants to bet on India. John chambers (Former CEO Cisco & Venture Capitalist) recently said that if he had to pick one country to invest in Asia, he would pick India and if he had to pick two countries, he would pick India 2 times over.
We have to invest heavily in human capital in skilling and upskilling so that the future talent that is coming to the marketplace is job ready and job worthy and this is not just related to the fields of engineering this is also related to old fields for example Urban Company provides work to plumbers, carpenters, electricians and the better the quality of these service professionals the more consumers want to avail services from them. So human capital and human capital related investments are critical.
The second is technology related investments for e.g. UPI was an absolute landmark, infrastructure that was created and many of startups succeeded because of success of the UPI, such broad-based systems have to be created in many other areas. Let’s not forget that for unicorns to get created the underlying economy has to be robust and that means we have to have robust cities, underlying infrastructure investments that need to continue. The third is a positive policy framework, a policy framework that is very forward looking which can think 20 years in advance.
This is the story behind the scenes of this journey of Indian startups to becoming unicorns or the great Indian unicorn rush as we are calling it. Obviously, from a lot of entrepreneurship skill by individuals who have come up with unique ideas and then worked on them in a sustainable manner and also the enabling environment which has been provided by the government.
(The author is an Advocate by Profession)
