45-odd Indian start-ups hold promise of entering unicorn club this year

SOONICORN STATUS: By 2025, India expects to add 95 new tech unicorns

India’s unicorn run is far from losing stream. The country, which added over 40 unicorns to its growing kitty in 2021, is looking at another 45 or so start-ups that have the potential to achieve $1-billion-plus valuation (the threshold to be called unicorn) in the near future. This is according to a report by business research and market intelligence firm PGA Labs, a unit of consulting firm Praxis Global Alliance.

The firm comes out with a quarterly report on India’s “soonicorn” — soon-to-be-unicorn — landscape. This is the fourth edition of its soonicorn list. PGA Labs did a quarterly analysis (October-December 2021) of the start-ups that were valued at $200 million or above between 2018 and 2021.

The sectors covered included fintech, logistics and agritech. Also included were edtech, e-grocery, healthtech, enterprise tech, retail tech and digital gaming. Among the top-valued soonicorns are Shiprocket, Ecom Express, Indegene, Ninjacart, Navi and Livspace. Also in the list are Practo, Bizongo, Khatabook and RummyCircle (Games24x7).

“Year 2022 will see consolidation as the winners will start getting separated from the ones that are not growing fast enough,” said Madhur Singhal, managing partner and CEO, Praxis Global Alliance. “Strong start-up activity in new sectors, such as healthtech, software-as-a-service (SaaS), and B2B will gain momentum in India.”

The median valuation funding of start-ups in the funding round prior to unicorn valuation is roughly $400 million-$600 million. There are currently 27 start-ups in this range. Of these, 18 have a valuation of over $500 million and are closer to becoming unicorns. Also, sectors such as fintech, logistics and retail tech could produce the most number of companies as soonicorns, turning into unicorns in the near future.

One of the companies expected to become a unicorn soon is supply chain tech firm Ninjacart, which is focusing on India’s fresh produce market to organise the agriculture ecosystem. In December 2021, e-commerce firm Flipkart India and Walmart, the world’s biggest retailer, made a fresh round of joint strategic investment of $145 million in Ninjacart, increasing the valuation of the firm to about $900 million.

Another firm expected to hit unicorn status soon is Dunzo, the Google-backed quick commerce player. It raised $240 million in its latest round of funding. The investment was led by Reliance Retail Ventures Ltd and according to sources, Dunzo’s valuation crossed $800 million in this funding round.

Last year in December, e-commerce logistics firm Shiprocket also raised $185 million in a financing round, which included investors such as food delivery platform Zomato and Temasek. This has increased its valuation to about $930 million.

Also last year, private equity firm Carlyle Group and Brighton Park Capital invested $200 million in Indegene, an enterprise healthtech solutions provider, for a minority stake. Its valuation crossed about $700 million.

Bizongo, a B2B e-commerce and supply chain enablement platform, recently raised $110 million in a funding round led by New York-based Tiger Global Management. With the latest round, Bizongo’s valuation soared to $600 million, making it the market leader in the segment. Ecom Express, provider of end-to-end delivery services and solutions for online retail companies, is also expected to become a unicorn soon, having already crossed a valuation of $768 million, say sources.

According to an earlier Praxis report, India expects to add 95 new tech unicorns by 2025. Year 2021 saw the highest number of unicorns in the country, with the fintech sector taking the lead followed by e-commerce, healthtech and SaaS. There are now about 82 Indian technology start-ups valued at $1 billion or more, according to various sources.

“Entrepreneurship is on an irreversible rise. We will see a new wave of seed or Series A investing,” said Singhal of Praxis. “2022 will also see the emergence of new asset classes in venture debt, funding for asset-heavy businesses, service businesses, etc, and more growth equity funds.”

In the previous edition released in September 2021, PGA Labs had shortlisted 36 start-ups that are nearing $1 billion valuation. Of these, three — Acko, Rebel Foods and Licious — have now entered the unicorn club.

Private equity and venture capital (PE-VC) firms invested in over 600 start-ups in 2021, according to Praxis. Fintech, enterprise tech and edtech sectors saw massive investor interest. PE-VC firms put in a record $63 billion (across 1,202 deals) in Indian companies during 2021, registering a 57 per cent rise over the $39.9 billion (across 913 deals) invested in the previous year, according to PE-VC deal tracker Venture Intelligence.

India minted a total of 44 unicorn companies in 2021, 15 of them during Q4'21, according to Venture Intelligence. The $23.4 billion invested into the IT sector-dominated unicorns accounted for more than 37 per cent of the overall value of PE-VC investments in 2021. The October-December 2021 quarter saw over $5 billion (across 25 deals) being invested in such companies.

“While the mega-sized investments and the unicorn rush hogged the headlines, a key highlight for the Indian PE-VC industry during 2021 was the successful IPOs of several investee companies — including Zomato, Nykaa and PolicyBazaar — on the domestic bourses,” said Arun Natarajan, founder of Venture Intelligence. “The IPOs, along with a string of successful liquidity events via secondary deals and strategic M&A — led by the $2.2 billion exit from payments firm BillDesk — will help establish the Indian PE-VC asset class on a firm footing on the global stage,” he added.

Year 2021 also witnessed eight investments worth $1 billion or more, led by Flipkart's $3.6 billion pre-IPO round (which marked the re-entry of SoftBank Corp to the e-commerce giant's list of shareholders, following its exit to Walmart in 2018). E-commerce was the favourite sector among investors in 2021, attracting $10.3 billion, followed by fintech, which attracted $7.7 billion, according to Venture Intelligence.