India has 100 unicorns, majority of them set up after 2005, says report
Employing a “rigorous investigation”, the report found more unicorns in India than conventionally reported.
New Delhi India has 100 unicorns with a combined market capitalisation of $240 billion, and two-thirds of them have started after 2005 because of remarkable changes in the funding, infrastructure, regulatory and business environment, a Credit Suisse research report has said.
Employing a “rigorous investigation”, the report found more unicorns in India than conventionally reported. “An unprecedented pace of new-company formation and innovation in a variety of sectors has meant a surge in the number of highly-valued, as-yet unlisted companies. While conventional Unicorn lists show 30-35 names for India, our exploration reveals a 100 of them!” Credit Suisse’s India Market Strategy report said.
A unicorn is a privately held startup company with a valuation of over $1 billion. At the Prarambh: Startup India International Summit on January 16, Prime Minister Narendra Modi said there were only four Indian startups in the “unicorn club” in 2014, which grew to over 30.
With a rapidly growing economy, the market capitalisation of listed equities in India has risen, making India the eighth largest market globally, and only 7% away from being the sixth largest after the US, China, HK, Japan and the UK, the report said. “The number of listed companies with market
capitalisation above US$1 bn has risen to 336 from 178 in 2010 and just 72 in 2005,” it added.
The report titled “100 Unicorns: India’s changing corporate landscape” said its coverage was wider, beyond the “normal” technology or technology-enabled sectors. The study also incorporates unicorns in conventional sectors such as non-banking finance, bio-tech and pharmaceuticals, modern trade, consumer goods and infrastructure like new ports or renewable energy generation.
The report points at a diversified sectoral split. In addition to the largely expected e-commerce, FinTech, education technology, food delivery and mobility companies, there is a rapidly growing number of such firms in Software-as-a-Service (SaaS), gaming, new-age distribution and logistics, modern trade, bio-tech and pharmaceuticals, it said. “These are only at the top of a fast-growing pyramid of 80,000 start-ups in India, which are incrementally now nearly 10% of new companies formed every year; the number of firms is up 70% in 8 years,” it said.
Although there is some geographical diversity in the cities where these firms have started, they are mostly concentrated in Bengaluru, Mumbai, Delhi, the National Capital Region (NCR), Hyderabad, Pune and Chennai, according to the report.
According to it, the list of 100 unicorns included Wonder Cement, GRT Jewellers, Manipal Hospitals, Joyalukkas, Kurl-On, Serum Institute of India, Oravel Stays (Oyo Rooms), Piramal Glass, Policybazaar Insurance, Vishal Mega Mart, CarDekho, Cars24, Flipkart, Lenskart, UrbanClap, ReNew Power Ventures, Hero Fincorp, National Stock Exchange, Zomato and Haldiram’s.
It cited the availability of private equity funding, rapid expansion of internet penetration, digital payments and biometric identity (Aadhaar), better physical infrastructure and highly skilled human resources as some of the key enablers in the growth of unicorns in India. The natural shortage of risk capital in an economy with low per capita wealth has been addressed by a surge in, mostly foreign, private equity, it added.
“The surge in unicorns creates numerous large pools of risk capital: even at 15-20% residual ownership on average of these businesses, US$35-50 bn of wealth has likely been created,” the report said. The new phenomenon has also contributed in growing number of millionaires in India, it said adding that easy exits for private equity investors should also trigger more interest in Indian businesses and trigger a virtuous cycle.