Being the world’s third-largest unicorn ecosystem, India has not seen a new unicorn in the last six months which is also the longest drought in seven years.
Dying Unicorn Frenzy
It can be an indication of the unicorn frenzy dying with the much-talked-about funding winter tightening its grip on valuations of technology startups globally.
Data by Venture Intelligence indicates that Molbio Diagnostics was the last company to achieve unicorn status in September 2022.
It had raised $85 million from Temasek and Motilal Oswal Alternates at a valuation of $1.53 billion.
Unfortunately, no other technology startup in the country has achieved the feat since then.
This seems to be the longest drought since August 2016, which lasted 17 months, according to the data.
Interestingly, this data is in stark contrast with that of 2021 when India was adding a new unicorn almost every week.
During that time, as many as 44 new unicorns minted in 2021 and another 23 were added in the first nine months of 2022.
How Did This Happen?
This is also affected by the central banks raising interest rates across the globe.
As the cost of money became expensive resulting in investors negotiating hard with founders and settling for much lower valuations compared to 2021.
The co-founder, general partner, Fundamentum Partnership, Ashish Kumar said, “the frenzy of chasing vanity metrics is gone, I will not claim that it will never come back but the founders are a lot more pragmatic about chasing a slightly profitable growth or close to a profitable growth even though it may not be as quick as what they were trying 12-24 months back.”
Further adding, “The Indian venture capital ecosystem also sees a lot of funds coming from the west and these guys have been out of the market. So this suggests that they have also become a lot more pragmatic about how much to burn and how much to invest,”.
According to the Economic Survey of 2022, India became the world’s third-largest startup and unicorn ecosystem in January last year and the country had over 61,000 recognised startups and close to 80 unicorns and was only trailing the US and China.
Now, the tally of unicorns has reached 108, at the same time there are more than 81,000 recognised startups.
