From the Decade of Startups into the Decade of Unicorns
Democratization and problem-solving through technology adoption have made startups synonymous with innovation and the gateway to India’s ambition of a $5 trillion economy. With more than 50,000 startups, India has become the third-largest ecosystem for startups in the last decade. While 2020, witnessed 11 startups from India joining the Unicorn club, by end of August 2021, 24 startups  have already joined the club. At this rate, India would have more than 100 unicorns by the end of 2023.
Countries and Unicorns in 2021
|No. of Unicorns||396||277||51||32||18|
|Avg. Years to Unicorn||7||6||7.3||6.5||6|
|Avg. Valuation (US$ bn)||3.1||4.7||3.3||2.7||2.5|
Source: Hurun Research Institute 2021.
Cheetahs and Gazelles:
While unicorn  is a privately held startup company with a value of over $1 billion, the Hurun Research Institute  has come up with two more terms, ‘gazelles’ and ‘cheetahs’. A startup founded in the 2000s, worth at least US$200mn if yet to be listed on a public exchange is qualified to enter the list. If the startup has an estimated valuation ranging from US$500mn to US$1bn and is likely to ‘go unicorn’ within 2 years, it is termed gazelle and if the startup has an estimated valuation ranging from US$200mn to US$500mn and expected to ‘go unicorn’ in 4 years then it was called cheetah. On Sept. 2, 2021, the Institute listed 32 Gazelles and 54 Cheetahs from India.
The Sectors of Growth
With India’s Fintech adoption at 87%, higher than the global average of 64 %, this segment is growing into a market with huge potential. By August 2021, India has more than 375 payment startups. With 6 gazelles and 11 cheetahs, E-commerce seems to be the most favored sector of investors. COVID -19 which accelerated digital adoption has provided an opportunity for retailing giants to go Etail. Software-as-a-Service (SaaS) industry is having 7 startups on the list. The Shared Economy business segment which facilitates co-working, co-living, shared mobility, and furniture rentals are next on the growth list. COVID 19 has brought a new sector into the focus – healthcare. Telemedicine and online delivery of health services got the attention of many. The use of AI, ML, and other automation technologies in the healthcare sector is expected to open new avenues for startups in India .
Drivers of Growth in the Startup Forest
Sector Potential: Demographic advantage  of having more than 65% of population below 35 years with an appetite for technology and innovations coupled with fast-developing digital infrastructure but low fintech penetration is enticing funding into the startups in the sector. Similarly, COVID has widened the scope for the E-commerce sector. Being in the right sector increases a startup’s potential to grow.
Endurance: For startups, to survive is to grow . The COVID 19 pandemic was a litmus test for the endurance of many startups. How fast can a management change from anxiety mode to adoption mode determines its survival, and validates whether a startup is about just enthusiasm or endurance too?
Technology Adoption: Sectors may be different but leveraging on technology is the common factor that is driving startups into the unicorn club. In 2020, 87% of all deep-tech investments were in AI/ML start-ups .
Leadership and Vision: There is no substitute for the competence of the management. The innovation and vision of the promoters coupled with the ability of the management to man the startup with the right people and lead them are key drivers of growth for any startup.
Staying focussed and sustaining growth: Losing focus and inability to handle growth could take even great startups like Snapdeal  to the verge of dissolution. The ability to handle, moderate, and sustain growth without losing focus is essential during the startup journey.
Becoming a unicorn is all about valuation, and valuation is not just math but involves a lot of imagination too. It is not just about the past earnings but also the potential of the firm to grow and the scope of the sector that can drive cheetahs and gazelles into the Unicorn club.
Startups contribute to economic dynamism through innovation and competition. They also lead to the creation of a skilled workforce. To know more,check out @ https://online.ifheindia.org/
Do you agree that the Government of India is building a strong ecosystem that is conducive for the growth of startups?Why?