India is fast emerging as a hotbed for investments into startups with potential to throw up unicorns (entities with valuations upwards of $1 billion). A recent report by PwC India talks of India added 10 unicorns in the third quarter of calendar year 2021. This, it says, puts India next only to the US, which added a whopping 68 in the third quarter. While the gap is still large between India and the US, it can hardly be missed that India still managed to stay ahead of China and others in the third quarter. China and Hong Kong added seven unicorns during the quarter while the UK and Canada, added four each.
Here are the 10 Unicorns added in Q3 CY2021 from India to the unicorn list and the space they come from and the estimated valuations (billion dollars):
– OfBusiness, FinTech, $3 billion (as of July 31, 2021).
– Eruditus Executive Education, EdTech, $3.20 (August, 12, 2021).
– UpGrad, EdTech, $1.20, (August 9, 2021).
– Vedantu, EdTech, $1 (September 29, 2021). – BharatPe, FinTech, $2.85 (July 30, 2021).
– CoinDCX, SaaS, $1.10 (August 10, 2021).
– Mobile Premium League, Online gaming, $2.45 (September 15, 2021). – Zetwerk, e-commerce B2B, $1.33 (August 20, 2021).
– apna, SaaS, $1.10 (September 15, 2021).
– BlackBuck, Logistics Tech, $1 (July 22, 2021).
(Source: PwC India and Venture Intelligence).
The PwC India report also points to the two decacorns (valued at more than US $ 10 billion) – Byju’s and Paytm that India currently has in the private market sector. This is in a smaller universe globally but one that is also growing. As Amit Nawka, partner, Deals and Start-ups leader, PwC India points out in the report: “With the increased funding activity and rise in valuations, the global decacorn list is inching towards 40.”
So, how do those who support entrepreneurship and innovative ventures view this? Financial Express Online reached out to Kris Gopalakrishnan, philanthropist, co-founder of Infosys, chairman and co-founder of Axilor Ventures and one who has backed many entrepreneurial ventures and in his personal capacity also invested in frontier areas of technology such as brain research. He says: “Clearly, what we are seeing is a confluence of many factors that is creating this ideal scenario. One is off course the fact that India is a very large market. Then, there are enough and more problem spaces – the manifold areas that need problem solving and solutions;” add to this, “disruptive technologies are allowing you to disrupt the space or the industry one is engaged in. Also, the fact that people’s confidence in using technology has increased because of COVID, which perhaps is one learning across the board from COVID – initially out of necessity but now getting greater appreciation in terms of the benefits that digital technologies can offer.”
An added benefit in all this, he says, has been the talent that has experience use of digital technology, can understand international best practices and can comfortably use and understand Artificial Intelligence (AI), Machine Learning (ML), blockchain and other technologies. Then, what has also helped is the changing landscape on funding. “With China seeming a tough market for investment, the focus is shifting to India.” Perhaps, what is running in parallel and is supportive is the fact “the government is also actively promoting startups, ease of doing business, talking of emerging technologies, talking of digital India and startup India, seeking to create a trillion dollar digital economy. Also, culturally, as a society we have accepted that is cool to be doing a startup.”
After all, parents today seem more open to children either venturing out on their own or joining a startup as against an earlier mindset of looking only at established companies for professional career. What is also worth noting, he says, is that today even in academic institutions there are incubators, accelerators and mentors.
Also, in India, many have seen the experiences of scaling up and this too adds to the confidence to investors.
In all, Gopalakrishnan sees a positive spiral unfolding – as in the more unicorns you create the more unicorns you will continue to create. He cautions that some failures will be there but then there is certainly a virtuous cycle that India is on in this space at the moment.
Why Deep Tech Also Matters
He however feels this could be further augmented by doing more in the deep tech space. Deep tech, very loosely, is an arena where companies work in technologies like AI, ML, blockchain, genomics, and use engineering innovation and build it into their core. The attraction here is that it opens up opportunity for IP (intellectual property)-ownership. This coupled with efforts are creating hardware and working in areas like quantum computing, design and fabrication of chips and all of these could address some missing pieces.
Where Angels May Like To Tread
The angel investor community is also growing with new funding going into seed stage. Try talking to any of them and while they also seem to agree with the factors that Gopalakrishnan points out as conditions that making it all possible, they also feel there is still scope to put in place enablers. These for instance, could be through a more favourable tax structure. And, ensuring elements that add to the ease of doing business and help retain the attractiveness of staying back in India and perhaps not be drawn to register outside India as they scale up as some do seem to find startup founders opting to become non-resident Indians.
But then, as Gopalakrishnan says, what does seem to work in favour at the moment is that the confluence of various factors is beginning to change the perception of the country and this could go a long way to also give confidence to entrepreneurs and the investors.
