Where does India stand on the global unicorn list?

This is important news for start-ups in India.

For the first time, the country has recorded a dip in its unicorns, bucking the global trend. For those unversed, the term unicorn refers to a privately held startup company with a value of over $1 billion.

According to the latest Hurun Global Unicorn Index 2024, India currently has 67 unicorns, down from 68 the previous year. However, the country maintained its position as the world’s third largest hub for unicorns.

The United States led the list with 703 unicorns, up 37 from 2022, while China had 340 unicorns. The UK and EU were ranked fourth and fifth on the list, respectively.

What went wrong with Indian unicorns? Is the decline trend a cause for concern? How global startups are faring. Here’s a closer look.

What the numbers tells us?

Hurun’s latest report reveals that the world added 171 unicorns in the past year, with the total number standing at 1,453 — a seven per cent increase and a new world record.

The United States alone added 70 new unicorns. The number for China is 56. However, both the US and China also saw the most number of dropouts, with 21 and 11 companies ceasing to be unicorns, according to a report in the Times of India.

Though India stands at number three, there is a distressing trend. The country produced more offshore unicorns than any other country, co-founding 109 unicorns outside of India compared to 67 in India.

What are the reasons for this slowdown? Anas Rahman Junaid, founder and chief researcher of Hurun India, says that the slowed startup ecosystem in India is primarily fuelled by a lack of investment in startups, even after the recent stock market record highs.

He added that of the unicorns founded outside of India, 95 were in the United States, with the Bay Area leading the way, followed by four in the United Kingdom, three in Singapore, and two in Germany.

According to the report, around 430 unicorns saw their valuations increase, with 171 being new faces. Approximately 170 had their valuations declined, with 42 being ‘demoted’ because their valuation no longer met the $1 billion threshold. Around 37 were ‘promoted’ from the list, with 29 going public and eight being acquired. 895 saw no change in their valuations. Their total value was $4.6 trillion, as per a Business Today report.

What went wrong for India?

The drop in valuation for Byju’s made it the biggest dip across any startup in the world, as per the Hurun report. Grappling with a slew of issues, the edtech company, which was valued at over $22 billion a year back, dropped off from the list, meaning it is worth less than $1 billion at present.

The 2008-founded Byju’s lost its coveted position as it restructured operations and cut costs after increasing losses, the report said, adding, “the former unicorn missed its revenue target for the financial year ending in March last year and is working to resolve a $1.2 billion debt”.

Commenting on Byju’s, Hurun Report chairman and chief researcher Rupert Hoogewerf said that some startups indeed fail and receive massive media attention in the process, but added that such companies are vital to an economy.

Food delivery platform Swiggy and fantasy sports focused Dream11 are the most valuable unicorns from India valued at $8 billion each, and are followed by Razorpay at $7.5 billion, the report said. The two top-valued Indian unicorns are ranked 83rd in the list globally, while Razorpay is at 94th position.

The unicorn list was led by 2012-founded Bytedance, owner of Tiktok, with a valuation of $220 billion, and was followed by billionaire Elon Musk’s SpaceX at $180 billion and Microsoft-backed OpenAI worth $100 billion.

What we know about AI startups?

There were some additions in the list of unicorns like the artificial intelligence platform Krutrim, Hurun India’s chief researcher Anas Rahman Junaid said. However, the same year has seen 60 AI-focused startups from the US and 37 from China break into the unicorn club, he said.

“This has been the year of artificial intelligence. OpenAI led the way, adding $80 billion in value to make it worth $100 billion today. In China, one-year-old Beijing-based Moonshot AI and two-year-old Shanghai-based MiniMax are paving the way for ChatGPT-like products.”

“Others include Atlanta-based OneTrust, which uses AI for data security; UK-based Graphcore, which highlights the global race to computational capabilities; and India-based Glance, which demonstrates the impact of AI in transforming content consumption on mobile platforms," the report added, as quoted by Business Today.

With inputs from PTI