A lot of startups are gaining media attention as Unicorns. It’s important to know what is unicorn startup. To begin with, a startup is called a unicorn if it has a value of more than one billion dollars. Aileen Lee first used the term Unicorn for such startups. Aileen was a venture capitalist who gave a new name to prominent startups – the Unicorn in 2013. Investors who invest money in unicorns are venture capitalists. They are capable of investing an enormous amount of money. Admittedly, a private company valued above $1 billion is rare.
Interestingly, there are a minimum of one thousand unicorns globally. What’s more, unicorns attract investment because of their innovative ideas. They make a growth-oriented business plan that takes them toward success.
Origin Of Unicorn Startups
Firstly, Aileen Lee first defined the term Unicorn as startups that have a value of over one billion dollars in 2013 in an article published in TechCrunch. She was the first person who names thirty-nine startup companies as unicorns. For your information, Aileen founded the Cowboy Ventures company. She wanted to call the startups formed after 2003 valued at more than one billion dollars. With this in mind, the word Unicorn denotes a rare startup with a very high value. Despite this, the number of unicorns in India and the world keeps increasing.
Background On The Evolution Of The Startup Ecosystem
There was a financial disaster in India in 2018, and it was called the Great Depression. To enumerate, it saw the beginning of a new type of startup ecosystem. There has been a trend of new startups and companies emerging in India since the late 90s. However, it was limited to people opening small-scale businesses. At the same time, the Indian Government began offering incentives for opening businesses to people. It encouraged business owners to start a business offering employment opportunities to needy people.
The government aimed to increase the GDP of India. In addition, the Internet started gaining popularity at the start of the year 2000 in India and the rest of the world.
The crisis of 2018 gave rise to the beginning of startups. After that, new companies like Flipkart and Ola became very popular.
Interestingly, the USA is a leader in having the most significant number of startups. India currently holds the number three position as a country with the most important number of startups. There were a vast number of startups formed in the year 2019 during the COVID-19 pandemic. Presently, people of all ages, both young and old, are opening startups in India. As a result, it has created a very favourable startup ecosystem in our country.
Early Examples Of Unicorn Startups And Their Impact On The Industry
- InMobi was the first Unicorn in India, named mKhoj earlier. To further enumerate, the Bangalore-based company is actually in mobile advertising technology. It offers mobile advertising facilities to businesses, developers, and publishers. For your information, InMobi is a multinational company. Its CEO, Naveen Tiwari, attributes the success of InMobi as a unicorn startup to the constant innovations done by the company. He said that the startup had undergone multiple stages of transition to be successful. Changing the business strategies and adapting to the market’s current needs is the reason for the high profits of InMobi.
- Another example is Flipkart, an online store launched in 2012. It is valued at about $37.6 billion. Another critical point is that the company raised 3.7 billion dollars in 2022. Binny Bansal and Sachin Bansal found Flipkart. The online store has acquired other companies like Myntra and PhonePe.
- Livespace is another unicorn startup that began in 2014 and became a unicorn in 2022. It is now a leading interior decoration company that offers home decoration and renovation services. What’s more, the company is valued at 1.2 billion dollars. It has been successful in raising funding of 450 million dollars.
- Next, we’d like to tell you about LEAD. It is a company that became a unicorn startup in 2022. To explain more, it is an Edutech company that offers technology-based courses for students. The startup is the only EduTech company valued at $1.1 billion.
Factors Contributing To The Emergence Of Unicorn Startups
Several factors are responsible for the emergence and growth of unicorns in India.
Firstly, India’s huge population is ideal for providing a market for a company. In addition, it attracts investment from investors in India and the rest of the world. Also, there are many talented and skilled professionals in our country. Startups can get investment from Venture Capitalists quickly. Admittedly, the startup ecosystem in India is perfect, and the government offers encouragement and incentives to people to launch their startups. Lastly, the increasing use of digital technology helps create a favourable environment for startups.
Characteristics Of Unicorns
Unicorns in different sectors share some standard features and characteristics. These features make them stand out from other startups. Let’s discuss the elements of a unicorn.
1. Rapid And Substantial Valuation Growth
Unicorns are growing at a fast speed in India and giving a boost to our economy. For your information, they offer outstanding innovations and technology-based products and services. In addition, a large number of people get employment through unicorns. There was an annual increase of at least one new Unicorn in India until the 2016-17 financial year. We have seen more unicorns launching every year since the 2017 financial year.
Furthermore, the number of unicorns is increasing at 66% per annum. There were 108 Indian unicorns in India on 31st May 2023. These unicorns had a value of 340.80 billion dollars.
2. Use Of Technology
Technology is the critical factor on which unicorns are based. For example, let’s talk about Paytm. It has used technology to enable users to make payments for recharging their phones and DTH. Also, the startup offers services for customers and other businesses.
3. Leaders Of A Specific Niche
Unicorns offer a unique service in a specific niche. Interestingly, they do something that is not thought of and done by others. Lastly, their specialization in a place helps them fight rival businesses.
4. Offering Innovative Solutions And Products
Constant innovation and evolution is the reason why unicorns are so successful. At the same time, following standard industry norms and trends doesn’t satisfy them. Instead, they go beyond that by innovating and developing new solutions and products. Oyo Rooms is an example. For your information, the company helps customers book accommodation when they travel somewhere.
5. Privately Owned
Privately owned companies in India have become unicorns in India. The startups get funds from investors. Furthermore, they attract investment from investors in India and other countries.
6. Growth Oriented MVP
Unicorns focus a lot on developing a Minimal Viable Product or MVP. Moreover, they invest time, money, and effort into testing, modifying, and scaling the product according to need.
The Future Of Unicorn Startups
All startups wish to have their company listed among unicorns. According to the latest data, over thirty-three per cent of companies became unicorns in India in the last financial year. For your information, startups get funding from the Startup India seed funding scheme started by the Indian government.
1. Trends And Emerging Sectors Likely To Produce Future Unicorns
We want to tell you what is unicorn startup sectors in which there is a vast scope for growth and success in the future for companies. The unicorns expected to be successful in the coming times are those that work in science and technology, healthcare, auto, renewable energy, retail, Internet, and agriculture.
2. Impact Of Technology Advancements On Unicorns
Technology advancements help unicorns grow further. To explain, Startups adopt modern technology as new technology evolves. Businesses use technology to build better products and improve existing products according to the market’s demands. That helps them in fulfilling the changing needs of target customers. Interestingly, unicorns use new technologies like cloud computing, robotics, and artificial intelligence to build their products. That said, modern technology is the main reason for the enormous success of unicorns.
3. Predictions And Speculations About The Future Of Unicorns
According to a recent report, India will have 147 new unicorn startups from 2023-2028. To explain, the ‘ASK Private Wealth Hurun India Future Unicorn Index 2023’ report says that India has eighty-three unicorns right now. With time, the number will grow more in the next five years.
In conclusion, unicorn startups in India are growing at a fast pace. There is enormous scope for the launching of new unicorn startups and their success in the future. According to data till 31st May 2023, India had over ninety-nine thousand startups that have gained DPIIT Recognition. 670 Districts in India have these businesses. That said, startups in industries like education, food and beverages, healthcare, information technology, and agriculture offer innovative solutions to problems faced by people. Lastly, we encourage aspiring entrepreneurs to make innovations and use the latest technology to make their startups a unicorn.