Startup Street: These Could Be India’s Next Unicorns
Source: BloombergQuint

Startup Street: These Could Be India’s Next Unicorns


India is minting startup unicorns at a record pace in 2021. And many more could be on the way to the billion-dollar-mark before the year wraps up.

There are at least 35 startups with the potential to reach a billion-dollar valuation in the near future, according to consulting and business research firm Praxis Global Alliance. Out of these 35 shortlisted firms, or “Soonicorns” as Praxis calls them, up to five could turn unicorns within the next two months, it said.

The report only underscores the kind of funding frenzy India’s startup ecosystem has witnessed in recent weeks. The country saw six new unicorns minted in the space of four days in April, marking the best first four months of startup funding in a year ever.

Indian startups have already raised more than a third of the money they netted last year.

“The number of unicorns has been rapidly increasing as investors believe in the accelerated growth opportunity digital in India offers,” Praxis Chief Executive Madhur Singhal was quoted as saying in a statement. “Capital needs of these hyper growth businesses are creating demand for large volumes of private capital.”

For their analysis, Praxis included startups that were valued at over $200 million between 2018 and 2021. They then evaluated funding, key investors, current valuations and the stage of the startup lifecycle they are in to whittle down to 35 names.

Fintech startups dominate the list with 15 such firms. They’re followed by healthcare technology, online grocery and logistics startups with four each.

Healthtech startup Practo is the closest to turning unicorn with a current valuation of $904 million based on its Series D funding. Payments startup BharatPe, too, is close to a $900 million valuation. Mumbai-based Eruditus, which provides education programs for executives, runs close with a $850 million valuation.

Other startup “Soonicorns” include Vedantu, Grofers, Rebel Foods, Mobile Premier League,, Dunzo, BrowserStack, Ninjacart and 1mg.

Also read: Startup Street: Just Three Sectors Took Home 75% Of Venture Capital Funding In 2020

The flood of investments in the startup space is helping expand the ecosystem beyond obvious unicorn-producing sectors like edtech and fintech. Credit Suisse had last month noted how companies from more conventional sectors like retail, textiles and staples are also rapidly growing.

That means, Credit Suisse said, India’s unicorn club could be much bigger than thought. In a report, it said that there may already be at least 100 unicorns in India, compared with the around 40-50 that standard lists suggest.

While there is much hype around unicorns, India’s funding boom comes with its own share of red flags. The speed of the dealmaking could lead to less rigorous due diligence on the part of investors.

In an earlier edition of Startup Street, BloombergQuint spoke to one of India’s fastest growing seed-stage accelerator that cautioned young entrepreneurs of chasing the money.

“The biggest challenge is an undue focus on funding. The mindset that it is only the money that defines the success of a startup is a dangerous one,” Ashish Bhatia, founder of India Accelerator, had said. “Funding news routinely makes it to the front pages of newspapers and magazines. It makes rockstars out of these entrepreneurs. The media has confused successful founders with well-funded ones.”

That distinction could very likely play out in separating the wheat from the chaff as India witnesses a historic boom in its startup ecosystem.

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