Funding woes continue: Only 3 unicorns this year, 20% startups downgraded

This is an index of the most valuable private equity or venture capital-funded companies in Indiafounded after 2000, ranked according to their latest funding round valuation.

India’s most valuable startups are having a tough time holding on to their value amidst greater regulatory scrutiny and a funding winter.  At least 20% of startups in the list of ‘future unicorns’ dropped off the list or got downgraded, according to the  ASK Private Wealth Hurun India Future Unicorn Index 2023.

The index is a ranking of India’s start-ups founded in the 2000s, worth at least US$200 million, not yet listed on a public exchange and most likely to ‘go Unicorn’ within three years (Gazelles) or five years (Cheetahs). The cut-off date was 31 May 2023.

New additions in the unicorn list declined sharply in 2023, indicating a slowdown in the Indian startup ecosystem.. India added only three unicorns - privately held companies with a valuation of over $1 billion - in 2023 against 24 in the year-ago period, according to the index. The overall number of unicorns also declined to 83 from 84 in the year-ago period.

"“The slow-down in the economy has been tough for certain companies, with almost 20% of last year’s Gazelles / Cheetahs either dropping off the list or being downgraded. Hurun Research believes these companies could take could no longer go unicorn within three years. Rising interest rates and geopolitical headwinds have combined to make it harder for start-ups to raise capital," said Anas Rahman Junaid, Hurun India Founder and Chief Researcher.
 

 

The list names gazelles which are expected to become unicorns in three years, and cheetahs that are expected to become unicorns in five years. With the number of start-ups reaching the unicorn level falling drastically in 2023, the index  demoted eight gazelles — start-ups that were founded in 2000 and have the potential to go to unicorn in three years — to cheetahs. It dropped 19 out of the unicorn list.

Despite funding constraints, Hurun Research found 147 Indian future Unicorns from 25 cities. On average, they were set up in 2015, with the vast majority selling software and services, with only 20% selling physical products. 37% are selling to businesses, while 63% are consumer-facing. Future Unicorns were seen disrupting financial services, healthcare, business management solutions and education.

A total of 18 companies got dropped off the list last year, but there were over 40 new additions as well, as per the report.

Electric scooter maker Ather Energy, quick commerce firm Zepto, and edtech company Leap Scholar are among the ventures that could potentially become unicorns.

Top 22 Gazelle's as more the report :

Highlights of the report are as follows:

Online future platform Pepperfry is the most valuable cheetah. 

EV startup Ather Energy,  quick commerce start up Zepto and ed-tech start up Leap Scholar are most valuable gazelles

Peak XV Partners, which was formerly known as Sequoia, is the biggest investor with stakes in 37 unicorns.

 Bengaluru continues to be the startup capital of India by being home to 53 probable unicorns.

Quick commerce startup Zepto's twenty-year-old co-founder Kaivalya Vohra is the youngest cofounder in the index. 

Double promotion: Consumer electronics start up Boat from last year's index skipped the Gazelle stage and entered the Unicorn club directly. 

The 147 companies featured in the index employ over 1.02 lakh people.

30 Indian future unicorns have overseas headquarters, 27 in the USA, two in Singapore and one in UK

E-commerce, fintech and Saas comprise 42 per cent of the Index.

18 women entrepreneurs from 17 companies have co-founded six Gazelles and 11 Cheetahs, making significant contributions to the start-up ecosystem.

Here are the Women-led future Unicorns in the ASK Private Wealth Hurun India Future Unicorn Index 2023

Financial services, healthcare, Business management solutions, logistics and retail are the most disrupted sectors

The cumulative valuation of these Cheetahs featured in the index experienced a remarkable year-on-year increase of 47%, amounting to US$26.3 billion. Leading the Cheetah index're the E-commerce start-ups with 17 representations, closely followed by SaaS with 14.

Top investors

Peak XV Partners, formerly known as Sequoia Capital India & SEA, is a prominent venture capital. With an impressive portfolio of 37 investments, Peak XV Partners emerges as the top investor in the ASK Private Wealth Hurun India Future Unicorn Index 2023.

Peak XV Partners has notable successes in its kitty, including Turtlemint, CleverTap, MedGenome, and Bira 91.

InnoVen Capital, backed by Temasek and UOB Group provides debt capital to high-growth companies, specializing in financing solutions for startups and emerging enterprises. InnoVen Capital has made investments in 26 start-ups that are featured in the ASK Private Wealth Hurun India Future Unicorn Index 2023. 

Among the notable start-ups that have received funding from InnoVen Capital are Ather Energy, Captain Fresh, Jumbotail, and Porter.

As the second-largest investor in the ASK Private Wealth Hurun India Future Unicorn Index 2023, Tiger Global has made significant investments in 25 start-ups. Their portfolio showcases a diverse range of companies, including Ather Energy, Captain Fresh, Bizongo, and Avataar. 

Where did these founders study?

IIT Kharagpur leads as the top undergraduate institute with 24 co-founders of future Unicorns, followed closely by IIT Delhi with 23 co-founders. In the post-graduate category, IIM Ahmedabad is the preferred choice with 14 co-founders. Among foreign universities, the University of Pennsylvania stands out with eight co-founders, followed by Stanford University and INSEAD with three each, highlighting their substantial contributions to the start-up ecosystem.

“Which countries are most likely to produce unicorns in the next three years? 

The US and China dominate with two thirds of the world’s known Gazelles, despite representing only a quarter of the world’s population. The rest of the world is currently led by India, the UK, Germany, Israel and Singapore.

“A successful start-up ecosystem requires role models, both individuals, such as those from the Hurun Rich Lists, and companies, such as those from the Hurun Global Unicorn and Hurun Global 500 most valuable companies series. If a city or country can attract the world’s most successful entrepreneurs and companies to set up shop there, that will have a roll-on effect," said Junaid.

Top sector:

In the ASK Private Wealth Hurun India Future Unicorn Index 2023, the e-commerce sector boasts a remarkable count of 21 future Unicorns, amounting to a total value of US$7.7 billion. Notably, Square Yards and Medikabazaar emerge as the most valuable e-commerce Gazelles, while Pepperfry takes the lead as the most valuable e-commerce Cheetah. The e-commerce start-ups listed in the index have collectively raised a significant investment of $2.8 billion.

Where are they headquartered?

Bengaluru has the third-highest number of tech start-ups in the world. According to the ASK Private Wealth Hurun India Future Unicorn Index 2023 Bengaluru serves as the home to 12 Gazelles and 41 Cheetahs, further solidifying its position as a hotbed for start-up growth.  Mumbai houses 19 start-ups in the index, and startups based in NCR boast cumulative valuation of US$11.3 billion.