How Indian unicorns galloped through 2022, in the graphics

In the first week of 2022, two other Indian internet startups, Mamaearth and Fractal Analytics, either became unicorns or reached a valuation of $ 1 billion. Seven more, each valued at more than $ 600 million, are in the works, including Ecom Express, OneScore and Jupiter Money, according to Venture Intelligence. This is the dynamic that continues from 2021: last year India added 44 unicorns, two more than the cumulative number of the previous nine years. After the United States and China, India now has the most unicorns.

India has also moved closer to more developed ecosystems in terms of pace and capital to produce unicorns. In 2021, Indian companies spent an average of 4.3 years between Series A funding and unicorn status, according to Tracxn. This is down from 6.9 years in 2020 and is closer to the five-year global average of 4.2 years. Likewise, Indian startups that turned unicorns through 2020 raised an average of $ 414 million reaching a valuation of $ 1 billion, compared to $ 346 million in the United States. For Indian unicorns in 2021, that figure fell to $ 395 million, indicating richer valuations than before.

Diversity on many fronts has accompanied progress in terms of scale and valuation. Against the previous dominance of e-commerce, the 2021 unicorns included 18 fintech companies and four health tech companies. Five unicorns had female leaders, according to EMA Partners. While Bengaluru still dominates, the geographic distribution is better. Likewise, while Tiger Global, Sequoia Capital and Accel each made double-digit deals, there were also 60 other investors. What is true for unicorns is also true for the startup ecosystem.

Location, location

Between 2010 and 2015, Bengaluru had more new startups (5,541) than Delhi NCR and Mumbai combined, according to the Bengaluru Innovation Report 2019. Since then, the city has been behind Delhi NCR. During the three-year period between 2016 and 2018, Delhi saw the creation of new businesses 1.5 times more than Bengaluru (5,598 versus 3,795). Between 2019 and 2021, the gap widened further to 1.7 times (4,520 versus 2,656).

However, when it comes to fundraising, Bengaluru continues to lead the rankings, with a share of 49% over the past three years. It is followed by Delhi NCR and Mumbai. Fundraising was once difficult for startups outside of these three cities, although Chennai, Pune and Hyderabad have seen better funding in recent years. In 2021, startups from 15 cities outside the top five, like Ahmedabad, Ernakulam and Jhansi, raised funds. As remote working intensifies, this trend could accelerate.

Follow the money

Overall, Indian startups raised around $ 39 billion in 2021, a three-fold increase from the $ 13 billion in 2020, according to data from Tracxn. Various groups of investors are at the origin of this dynamic. These include venture capital firms (Sequoia, Tiger, Accel, Titan and Blume depending on the number of investments), private equity funds (Temasek, Westbridge and Lightrock), accelerators and incubators (Y Combinator, 9Unicorns and Venture Catalysts) and companies (Tencent and Google).

In a 2021 report, Bain Capital said that India’s venture capital industry has gone through four distinct phases: investor optimism towards first-generation startups (2011 to 2015); maturity and moderation (2016-17); exits and emergence of new sectors (2018-19); and disruption of covid-19 (2020-21). The past year was marked by several factors, including the debut of stock market listing and the keen interest of new investors. There were 1,145 top investors in Indian startups in 2021, up 62% from 2020 and the highest on record.

Technological disruption

This investor interest in India has been motivated by multiple factors. The pandemic has accelerated digitization across all sectors, giving tech companies a boost. In an October 2021 report released by IVCA and Preqin, Manish Kheterpal of WaterBridge Ventures said, “The tech sector will have a market share of at least $ 750 billion in an Indian economy of 4.5 to 500 billion. billion dollars by 2030 … golden decade for Indian venture capital and technological innovation. “

China has played two key roles in the evolution of the Indian start-up and finance space. Its own crackdown on the tech sector made investors think twice and some of the money was transferred to India instead. Meanwhile, in 2020 India banned a bunch of Chinese apps, including ByteDance’s popular short video app, TikTok. A number of Indian companies have jumped in to fill the void. Social commerce companies, including Sharechat and Verse, raised $ 1.4 billion in 2021, nearly 13 times more than in 2020 and the highest-funded category in 2021. Until 2022.

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