Unicorn League: Not Cats & Dogs, It's Raining Unicorns in India

Attaining unicorn status is a milestone in the journey of every startup that is heading towards success. The companies strive really hard to raise funds and to escalate its valuation to over $1 billion. However, this unicorn vogue has spread across the Indian startup ecosystem, which indeed is encouraging budding entrepreneurs to dream big.

In 2014, India had only four startups that joined the unicorn club, but now the country has turned out to house nearly 40 unicorns. As the firms endeavor to attain unicorn status, it has been estimated that so far, about 612 firms have turned unicorn across the globe, and their valuation is approximated to be $2,0039 billion. However, the Indian unicorn firm's valuation is estimated to surpass $80 billion.

Lately, unicorn fad is spread across the startup ecosystem; as a result, ten new startups have joined the unicorn club just four months past entering 2021.  Alongside, the research firms and industry experts predict that India would further witness a colossal surge in the number of unicorns by the end of 2021. Presently, the country houses close to 40 unicorns. But, the NASSCOM report hints that India would have nearly 50 unicorns by the end of 2021. Although the current pace at which Indian startups are operating, it could undoubtedly surpass the predicted number.

The first week of April 2021 has been exceptionally good for the Indian startup ecosystem as five new companies have already entered the unicorn club. The startups that made a thunderous entry include social commerce startup - Meesho, Infra. Market, e-pharmacy - API Holdings, Cred and Digit Insurance – Groww, enterprise messaging platform-GupShup. However, an AI-based startup is expected to be the next firm to join the club in the following week. The other firms that joined the club early this year include Digital Insurance, InnovAccer, Five Star Business Finance, and Pharmeasy.

Nevertheless, the funding poured in for the Indian startups has been soaring to a two-year high since the quarter to March and is certainly not exhibiting any slowdown. Alongside, the recently funded startups have also marked a triple jump in valuations as compared to their last funding round. Although more Indian startups are joining the unicorn club, it is not a cakewalk for the startups to attain the unicorn status as it takes a lot for them to get there, such as developing a business based on technology, building disruptive business through innovation, and creating massive growth opportunities in the market, formulating a scalable model- as this grabs the attention of valuable investors which in turn would aid the startups in achieving the much-desired unicorn status.

Here is a gist of how these startups headed towards the unicorn club.

Kamesh Goyal's brainchild Digital Insurance, a Bengaluru-based startup, is the platform that has leveraged technology to ease the process of getting general insurance through the services such as audio claims and smartphone-enabled self-inspection. Presently, the company's valuation is estimated to be $1.9 billion, and it is the maiden Indian startup to enter unicorn club in 2021. Although the company has not disclosed the fundraising details, certain media has figured it to be two tranches of $84 million and $18.5 million. The investors who participated in the fundraising include Faering Capital, A91 Partners TVS Capital Funds. So far, the company has raised a total of $244.5 million, and claims to be a profitable venture, and has beheld profits in all three-quarters of FY21. Additionally, the company also grew 31.9 percent between April and December of 2020, with a premium of $186 million.

On the other hand, Five Star Business Finance is a small business lender that has acquired $234 million and elevated its valuation to $1.4 billion. This funding round has been led by its existing investors Norwest Venture Partners, Sequoia Capital India, along with new investors, KKR and TVS Capital. However, the investment is a combination of primary infusion in the company and the secondary shares that the existing investors have sold, namely Matrix Partners and TPG Capital.  

Similar to the prior companies, the B2B commerce company Infra.Market has fetched $100 million in Series C funding that was led by Tiger Global. However, the Infra. Market's Existing investors, namely Nexus Venture Partners, Accel Partners, Sistema Asia Fund, Evolvence India Fund, and Fundamental Capital GmbH, have also participated in this funding round. With this funding, Infra. Market's valuation has escalated to $1 billion. Presently, the firm aims for the $140 billion construction materials market, strongly focusing on the infrastructure sector.

Furthermore, in a funding round led by SoftBank Group Corp, social commerce Meesho has raised about $300 million funds, which escalated its valuation to $2.1 billion.  However, Meesho intends to use the funds to spread its talent pool across various other areas such as business, product, and technology. Following Meesho, Fintech startup CRED announced its Unicorn status the very next day. The firm has raised $215 million in a Series D funding round, which rocketed the Cred's valuation to $2.2 billion. Also, it is the second-fastest Indian startup to achieve unicorn status in just 29 months since its inception.

In the health tech sector, Innovaccer stands as the first startup to turn unicorn earlier this year. On February 24, the company revealed the closing of its Series D funding round led by Tiger Global Management, which soared its valuation to $1.3 billion. Similarly, the three-year-old Digit Insurance is the first fintech startup to become a unicorn in 2021. It is revealed that after closing its fresh funding round from its existing investors, Digit Insurance's valuation crossed $1.9 billion.

Jackpot in April

The firms that marked April 2021 as an exclusive month for the Indian startup ecosystem are PharmEasy and Groww; both joined the unicorn club on the same day, April 7. PharmEasy, an online pharmacy owned by API Holdings, had gathered $350 million in a Series E funding round led by TPG Growth and Proses Ventures, which turned it into a unicorn. However, the firm's existing investors, namely LGT Light rock, Eight Roads, CDPQ, Temasek, and Think Investments, also took part in the funding round.

Likewise, Groww raised $83 million in a Series D funding round that triggered its valuation to exceed $1 billion. The funding round was led by Tiger Global, and the company's existing investors, such as Ribbit Capital, Sequoia Capital India, YC Continuity, and Propel Venture Partners, had also participated.

Lastly, the enterprise messaging platform, Gupshup is the latest entrant to the unicorn club. It has raised $100 million from Tiger Global that boosted its valuation to $1.4 billion. Gupshup's last funding round was held in 2011. With its fast-paced growth in the last few years, Gupshup exited 2020 with an annual revenue run rate approximating to $150 million.

Not just this year, the India startup ecosystem also had a good number of unicorn entrants in 2020. Despite the economic depression caused by the COVID-19 pandemic and its resultant lockdown, almost every business faced a downfall. Yet, certain startups managed to raise funds and escalate the valuation of the company. Consequently, the country housed nearly 11 unicorns namely Unacademy, Pine Labs,  Zenoti, FirstCry, Postman, Nykaa, Zerodha, Razorpay, Cars24, Dailyhunt, and Glance.