What is a unicorn start-up and how does a start-up turn into a unicorn?

Unicorn start-ups are privately owned start-ups with 1 billion Dollars or Approximately 7,500 Crores Indian Rupees valuation. A unicorn is a mythological character, described as a horse that can fly.

But the term was first used by prominent seed-investor, Aileen Lee, when she wrote about the billion-dollar tech start-ups like Google and Facebook in the early 2000s.

The term emphasised the exclusive number of Unicorn startups. They travelled the journey from being rare to today when you can the complete list of unicorn companies at your disposal in distinct industries including artificial intelligence, Fintech, and many more.

But, how are unicorn startups valuated?

The valuation of start-ups is difficult as compared to the listed companies whose market capitalisation is available. You have their price-earnings ratio and price to book value ratio etc to compare them with other listed companies to see if they are undervalued or overvalued. Each of these factors can be analysed through profits.

In most cases, start-ups do not have profits. Hence, unicorn companies are start-ups that are valued by venture capitalists and investors who want to invest in the company. These evaluations are based on the company’s growth potential and expected development, and not exactly the company’s actual financial performance.

The process takes into consideration various factors and involves focusing on the development of long-term forecasts. Since start-ups can be one-of-their-kind, they may have complications in the process of valuation.

Usually, these valuations give the investors confidence in the start-up’s potential and attract acquisitions from the larger organizations.

List of Unicorn Startups & Markets

India, in 2021, has 70 unicorn startups. 40% of India’s unicorns have been created in 2021.

Fun Fact: In 2020, Indian unicorn space exploded when 11 companies became unicorns with their performance and leadership.

The complete list of unicorn companies that hit the Indian market in 2020 includes Unacademy, Pine Labs, first cry, Zenoti, Nykaa, Postman, Zerodha, Razorpay, Cars 24, Dailyhunt, Glance. These 11 start-ups secured the unicorn tags in the year 2020 and set the groundbreaking record.

• Unacademy is an ed-tech platform. Originally created a YouTube channel by Gaurav Munjalm Unacademy became India’s leading learning platform by Gaurav along with co-founders Hamesh Singh and Roman Saini.

• Pine Labs is an offline payment processing company. The financial tech company is a 1998 founded brand by co-founders Lokvir Kapoor Rajul Garg Tarun Upaday.

• First cry is Indian’s leading kids’ e-commerce store. The Supam Maheshwari and Amitava Saha founded brainchild brand successfully offers baby care products to the masses.

• Zenoti is a software manufacturer for spas and salons. The fifth Indian software product company in the Unicorn club, Zenoti allows mobile-first solutions for appointment scheduling, self-check-in, payments, employee management and even inventory tracking across the globe.

• Nykaa is an e-commerce company in cosmetics and grooming company. Founded by Falguni Nayar at the age of 50 years, in 2012, Nykaa leads the Indian e-commerce space as a Unicorn start-up. The Indian lifestyle retail brand offers solutions in beauty, wellness, and fashion products.

• Postman is an API management software. The Abhinav Asthana founded Indian software as a service (SaaS) startup that assists businesses in the building and testing their application programming interfaces, or APIs.

• Zerodha is a known brand across India that is leading in online stock trading. Visionary CEO Nithin Kamath founded the brand by trading in the morning and working at a call centre at night after being introduced to trading at 17.

• Razorpay is an online payment processing company. The Bangalore based fintech start-up is founded by Harshil Mathur and Shashank Kumar. It is a first-of-its-kind start-up that allows the business to accept, process, and disburse payments via its product suite at the same time as a popular mobile wallet.

• Cars 24 is a used car buying and selling platform often seen across India founded by Vikram Chopra, Mehul Agrawal, Gajendra Jangid and Ruchit Agarwal. The C2B model includes buying used cars from individuals or dealers and selling them to other dealerships.

• Dailyhunt is a leading content platform offering news, audiobooks, etc. Formerly known Newshunt, Dailyhunt was founded by Virendra Gupta.

• Finally, Glance is an artificial intelligence-powered company owned by adtech unicorn InMobi. Co-founded in 2019 by Naveen Tewari, Abhay Singhal, Mohit Saxena, and Piyush Shah, Glance is a service that comes pre-installed on mobile phones manufactured by Samsung, Xiaomi, Gionee, and Vivo headquartered in Bangalore.

The complete list of unicorn startups in India 2021 includes 70 names, as of 2021 like Byjus, Paytm, Meesho, PharmEasy, CRED, Groww, ShareChat, etc.

How to Become Unicorn Startup?

According to a recent report, India added 3 unicorn per month in 2021. No one unicorn start-up is like another. There is no secret sauce to becoming a unicorn start-up. But, some common traits can be noticed in several unicorn start-ups.

1. Disruptive: Being one-of-its-kind startups with solutions that never existed and transformed the way people worked is key to being a unicorn. Uber changed the way people commuted as it connected the passenger with the cab driver through phones. Airbnb changed the stay situation during travelling, and Paytm money changed how people transacted.

2. Creating Demand: Unicorn start-ups tend to create a space for themselves where an established industry has already been working traditionally. Be it Uber or Paytm, as an example, you can see, they entered the market with an innovative solution and created demand by making people realise they can do things differently and more efficiently.

3. Consumer-focused: Most of the above-mentioned start-ups in the List of Unicorn Startups are delivering solutions B2C. It became in established markets, the focus is eventually on people creating the solution. But Unicorns are focused on delivering solutions to people on the receiving end.

Are IITs behind the unicorn start-ups in India?

Conclusion:

We hope that you got an understanding of the Unicorn Startups. We have tried to cover different aspects of the unicorn start-ups to allow the future unicorn founders and investors to give an insight into the different aspects surrounding the concept: the unicorn valuations, characteristics, and 2020 unicorns of India.