Several startups in India may lose their Unicorn status, says report

In total, around 105 start-ups in India attained the status of Unicorns between 2018 and 2022 but the active number of unicorns has now been reduced to 84

Owing to decreased funding and crashes in late-stage deals, several startups in India may lose their Unicorn status. A company with a valuation of over $1 billion is considered to be a Unicorn in India. According to a report in the Financial Express (FE), several experts said that start-up founders are trying to avoid raising money due to unfavourable market conditions. But those who have already taken the "plunge" may lose the status quo as a unicorn. 

"Most big startup investors in India are global tech investors and they usually compare some of the domestic Indian startup valuations with tech stocks in the US, Europe, Chinese and Japanese markets. So, they (the global VCs) will mark down Indian holdings if tech stocks fall, which is a trickle-down effect from public to private markets," a consultant told FE. 

In the last five years, around 7 Indian start-ups have lost their Unicorn status. In all, around 105 start-ups in India attained the status of Unicorns between 2018 and 2022. But the active number of Unicorns has now been reduced to 84. Seven have lost their valuations due to investor markdowns and around 10 were listed on the bourses. 

Quikr and Hike lost their Unicorn status due to investor markdowns. Snapdeal, Shopclues and Paytm Mall lost their status due to a fall in valuation by their investors. 

SoftBank, which is an investor in several Indian startups, has also marked down the valuations of over 280 firms according to FE. This has set a "worrying" precedent for Indian fund managers. 

"Most startups which are currently valued at more than a billion dollars should not be more in that $800 million or so…In the last two years, we were in a very high valuation environment both globally and domestically. And now due to US tech stock correction, some of that will reflect on the Indian companies and hence, down rounds may happen," Pankaj Makkar, managing director at Bertelsmann India Investments (BII) told FE.