Over 122 potential unicorns, but very few to be profitable

India is expected to deliver another 122 unicorns within the next few years, but very few are going to be profitable, according to a study published by Hurun Research Institute and ASK Asset & Wealth Management. Of the 122, around 51 startups are expected to become unicorns within two years. The most valued startups on the list include firms such as Shiprocket, a five-year-old LogisticsTech startup, followed by hyperlocal delivery firm Zepto, e-commerce start-up Turtlemint, electric vehicle manufacturer Ather Energy, Fintech startup Vivriti Capital and others.

Another 71 startups, including Pepperfry, fintech start-up Juspay, Ratan Tata-backed Fintech Mswipe Technologies, Pixi, SUGAR Cosmetics and others, are expected to touch the $1-billion mark in the next four years. The prospective unicorns featured on the Hurun list were founded on an average in 2015, with the majority of them selling software and services while another 17% are selling physical goods. Around 37% are business-to-business sellers, while 63% are consumer-facing.

Financial services, logistics, healthcare and education are among the most focused sub-segments by the future unicorns, the study pointed out. Interestingly, only 17 of these firms, which have potential to turn unicorns on the Hurun list, made profits in FY21, indicating that the vast majority of India’s future unicorns may have to subsidise their revenue by raising additional venture capital or private equity funds. However, these companies currently employ more than 82,300 people.

“While compiling the ASK Private Wealth Hurun India Future Unicorn Index 2022, we discovered that the country’s start-up ecosystem is expanding at an unprecedented rate. In just one year, the number of unicorns has increased by 65%…Probably, the pandemic has accelerated the disruption of traditional businesses and fostered the emergence of startups. The ecosystem is gradually attaining the requisite maturity and resilience,” Anas Rahman Junaid, MD and chief researcher, Hurun India said in a statement.

The study also added that India’s future unicorns are currently worth $49 billion, with an increase of 36% compared to last year, while Bengaluru continues to be the unicorn startup capital of India which is home to 46 probable unicorns followed by Delhi-NCR (25) and Mumbai (16). Around 21 Indian future unicorns have overseas headquarters, 18 in the US, two in Singapore and one in the UK. Only 15 startups featured on Hurun’s potential unicorn list were led by women.

Social content startup Pratilipi is the only company in the index with two women co-founders. Aged 28, Vrushali Prasade of Pixis is the youngest woman co-founder featured in Hurun India Future Unicorn Index 2022. Pixis is a company providing codeless AI infrastructure for marketing.

At the top of the index is Kanika Gupta, who is the co-founder and COO of PropTech aggregator Square Yards. She is an alumnus of Wharton Business School. Manju Dhawan, co-founder of Ecom Express, was the first entrepreneur in her family.

The youngest startup founder in the index is Kaivalya Vohra, aged 19, of quick commerce gazelle Zepto. His co-founder Aadit Palicha is just months older at 20. Dropouts from Stanford University, and while quarantined in Mumbai during the lockdown, they came up with the idea of Zepto, which now operates a 10-minute grocery delivery service.

The oldest founder in the index is K Satyanarayana, aged 61, of Ecom Express. The average age of Indian startup founders in the index is 38. There are 18 startup founders aged under 30 and 19 aged above 50.

Cumulatively, the 122 identified potential unicorns in the index raised around $17. 8 billion in funding, which is an increase of 47% compared to last year. With a $700-million investment, Dunzo is the most funded on the list followed by Aye Finance ($610 million) and Navi Technologies ($580 million).

Having invested in 39 probable unicorns, Sequoia is the most active investor in the Hurun Future Unicorn Index followed by Tiger Global with stakes in 27 future unicorns. Some of the most valuable future unicorn on Sequoia’s portfolio include names like Classplus, DeHaat, Porter, Progcap and CityMall. While Tiger Global had another 21 startups on its portfolio, including names like GreyOrange, Captain Fresh and MoneyView.

Early and growth-stage VC firm Accel came third on the list of most active unicorn investors with 19 startups that are expected to touch the $1-billion valuation mark within the next 2-4 years. EV manufacturer and ride-sharing start-up Bounce, B2B kirana supplier Ninjacart and SaaS platform CleverTap are the prominent startups that have received funding from Accel. It is the first VC firm to back companies such as Acko, Blackbuck, BookMyShow, Bounce, BrowserStack, Moglix and Rupeek, among others.

Ratan Tata, the chairman-emeritus of the Tata Group turned angel investor, has invested in three startups on the future unicorn list. Tata has invested in over 30 startups, including Ola Electric, Paytm and Zivame, in his personal capacity and some via his investment company. .