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Thanks to funding crunch, India has not seen a new unicorn in over 6 months

This is the longest drought since August 2016 when it took 17 months for India to come up with a new unicorn

startups, funding, business

Illustration: Binay Sinha

BS Web Team New Delhi

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India, the third biggest startup ecosystem in the world, has not seen a new unicorn in over six months, data from Venture Intelligence showed. Molbio Diagnostics was the last startup to cross the valuation of $1 billion in September last year. Currently, India has 102 unicorns.

This is the longest drought since August 2016, when it took 17 months for India to come up with a new unicorn. Social media messaging app Hike gained unicorn status in August 2016, and then ed-tech startup Byju's became a unicorn in January 2018.

This contrasts with 2021 when India added a new unicorn every week. In 2021, 44 new unicorns were recorded in India, and 23 were added to the list in 2022.

The funding crunch globally has already led to lower margins and layoffs. It has also led to delayed stock listings for startups like Oyo in India.

According to data from CB Insights, startups in India raised just $2 billion in the first quarter of 2023, 75 per cent lower than the same period of last year. This is the smallest quarterly number in nearly three years.

And only 271 Indian startups raised funding in Q1 2023, compared with 561 last year, according to CB Insights.

A report by Reuters said that at this rate, startups may raise less than $10 billion this year, a far cry from the record $30 billion garnered in 2021 and $20 billion in 2022.

Global factors such as high rates and inflation have weighed on the investment climate in India and elsewhere - startup funding in the US dropped by around half to $32.5 billion in the first quarter, while in China, it fell 60 per cent to $5.6 billion.

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First Published: Apr 27 2023 | 5:21 PM IST

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