Three takeaways from Credit Suisse’s list of 100 Indian Unicorns
The report picks 100 unlisted companies, mostly with a valuation in excess of $1 billion, but more than the specifics, which are, no doubt, the subject of celebration and debate in many quarters, it is the trends evident in the list that are interesting
Most lists are subjective. A list that did the rounds late last week, enumerating 100 Indian unicorns, is no exception.
It is culled from a report by Credit Suisse—titled 100 Unicorns: India’s Changing Corporate Landscape—which was not meant for wide circulation, but that, because of its theme, has gone as viral as the same firm’s House of Debt Report that came out a few years ago (no prizes for guessing what that was about, though).
The report picks 100 unlisted companies, mostly with a valuation in excess of $1 billion, but more than the specifics, which are, no doubt, the subject of celebration and debate in many quarters, it is the trends evident in the list that are interesting. There are three in particular.
The first is location: 73 of the 100 Unicorns are located in Bengaluru (29), the Mumbai-Pune belt (20/5), and the National Capital Region (Delhi, Gurugram, Noida; 19). By rough measure, a third of the companies started after 2005, are part of the new economy, and were founded by first-generation entrepreneurs. Most have been funded by private equity or venture capital firms. Yet, the geographical concentration that has characterised India’s corporate sector for decades, remains. This is a lesson for India’s policymakers and urban planners—India has, at least, 50 cities with population in excess of a million. That three geographical clusters account for three out of every four unicorns should be cause for concern (and also cause headaches for administrators in the three clusters who have to ensure that their soft- and hard-infrastructure can cope). Add Chennai (7) and Hyderabad (8) to the mix and the number goes up to 88.
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The second, especially in the context of the immediate past, is the emergence of Indian pharmaceutical and biotech companies as global powerhouses, not just in generics (or off patent drugs) but as innovators and manufacturers in their own right. The sector has been the next big thing for long, but appears to be coming into its own now, which is only apt.
The coronavirus disease pandemic continues to roil the world, although vaccination drives have begun in several countries, including India. India has approved two vaccines, both locally made, and one locally developed; local companies have rights to make at least two more vaccines that have been approved by regulators in other countries, and there is at least one more promising local vaccine candidate. No other country can boast of such riches. As the world focuses more on healthcare, and with vaccine development moving to an entirely new (and hitherto unthinkable) trajectory—both are a result of the Covid-19 pandemic—the next decade promises to belong to the life sciences, and it is likely that the next big thing will actually become the next big thing.
The third is the emergence of large and hugely successful companies to address traditional bottlenecks in transactions and credit, and in logistics. On the first, fin-tech is a big story in India — the market is huge and mostly untapped; many of the existing credit providers (lenders) and transaction engines are clunky and inefficient; and the regulatory regime is still emerging.
On the second, logistics and delivery were ripe for renewal and the economics of e-commerce delivery (and the rapid growth of e-commerce in the country) have hastened the process—which perhaps explains the presence of companies from this business in the list. In the new economy, ideas, competitiveness, and unit economics all matter, but timing is perhaps the secret sauce.