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The Real Unicorns

by Tavaga Invest

India is home to the third-largest count of unicorns

By: Tavaga Research

What is a Unicorn Startup?

The term, unicorn startup, in the world of business, refers to a privately-held start-up whose worth is equal to or more than $1 billion, often in a relatively short period of time.

The renowned US seed-funder for software entrepreneurs and founder of Cowboy Ventures, Aileen Lee is credited with coming up with the unicorn definition in 2013.

Unicorn, Meaning a Rare Breed

Lee is said to have used ‘unicorn’  in a Techcrunch article to capture the rarity of and delight in finding such successful ventures in the world of business. Of course, with time, the number of unicorn companies has increased manifold, way more than the 39 unicorn start-ups in 2013 when the term was coined.

The rounds of funding that can create a unicorn

The journey of an entrepreneur can be both exciting and fraught with nerve-wracking days, months, or even years. Funding in the early stages is perhaps the biggest hurdle an entrepreneur faces and once crossed, rings in the greatest validation for the fledgling business. 

The epithet of a unicorn is as much about the amount of capital a startup receives as it is about this sense of achievement, almost like a crossing of a threshold to become a more confident business.

Seed Funding

The very first round of funds for a startup in that pursuit of the first $1 billion comes in the form of seed funding. Seed investors or angel investors could be friends, family, mentors, or the entrepreneur themselves backing the start-up.

Seed funding, conveniently named for its role in sprouting a business, sustains the founding team of start-up, develop the company’s business intelligence including customer base and modus operandi.

Seed funding
Source: Tavaga

Series A Funding and Series B funding

Series A and Series B funding get the company to scale up, after having set up a strategy, operations, and even a few customers in the earlier stage. Series A and B funds, infused by venture capitalists with an eye on key performance indicators and proof of concept from the seed-funding stage, help in reaching a wider audience and even expanding operations.

Series C Funding

By the time the company raises series C funds, it has established a name in its industry, with a market share and a competitive product. The objective is again expansion, only instead of increasing locations or cities, the start-up could be reaching across to a new country. Or, branching into a complementary business or even acquiring another company.

Given the nature of unicorns and their runaway success, they attract a lot of forex as well. Star investors, VCs and private equities with an international footprint, scouring the globe for opportunities, are major sources of unicorn finance forex. An example being Masayoshi Son, Softbank CEO and investor who has a stake in various Indian startups like Ola, OYO, Hike, Delhivery, etc.

What Does it Mean to be a Unicorn Startup in India?

India reached its century of unicorn startups with a valuation of $333 billion. It is the third-largest count of unicorns after China with 301 and the US with 489 unicorns.

Flipkart & Byju with a valuation of $37.6 Billion & $21 billion, has taken the top spot in the list of start-ups in India, followed by the fintech start-up One97 Communications’ brand Paytm & Nykaa with valuations of $16 billion & $14 billion respectively.

Top 5 valued startups in India

Top unicorn startups in india
Source : Tavaga research

How Many Unicorns are there in the World

The milestone of $1 billion in funding came into vogue at the turn of the millennium, after the dot-com bubble burst, even though they were uncertain times for tech start-ups. In 2021, it is a different picture with more than 600 unicorns thriving around the world, according to CB insights.

With China and the USA leading the pack with 400+ unicorns among themselves, India still has a long way to go in unicorn count. However, the number of unicorns is the third-highest in the world.

Unicorns hail from diverse sectors such as e-commerce, fintech, edtech and media. 

With the world catching the TikTok (short video sharing app) fever, it made the platform’s Chinese owner ByteDance the most valued start-up in the world, with a valuation of $140 billion.

Top 5 Unicorns of the world

Top 5 unicorns of the world

E-commerce and fintech service providers, contributing to 31 percent of the unicorn space, are clearly the darlings at the time, with the Alibaba-affiliate fintech company, Ant Financial Services (previously Alipay), pegged for a valuation of $150 billion, is set to become the world’s highest-valued unicorn. 

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