The year 2019 may have been a mixed one for India’s start-up environment, but the year 2020 is likely to see the ecosystem gain both heft and funding momentum. The last year saw the country’s youngest firms struggle to navigate through policy hurdles like an inconvenient angel tax and increased scrutiny over the e-commerce sector.
However, 2019 was also the year which saw India welcome the most number of companies to the unicorn club in a single year. Nine companies have crossed the USD 1 billion valuation mark during the year, and industry experts say that 2020 is set to see an even larger cohort make the cut.
According to a report from Nasscom released late last year, India created nine unicorns in 2019 including online grocer BigBasket; fantasy gaming platform Dream11; logistics start-up Delhivery; eyewear retailer Lenskart; trucking logistics firm Rivigo; cloud-based contract management firm Icertis; data protection and management firm Druva; and Ola Electric, the electric vehicle arm spun off from the ride-hailing platform.
Along with HighRadius, which became 2020's first unicorn when it raised USD 125 million at a valuation of USD 1 billion this month, the total number of unicorns in India currently stands at 25. And technology industry lobby, Nasscom’s president Debjani Ghosh believes that a whopping 52 start-ups in India now have the potential to join their peers in the USD 1 billion plus club.
A few of the potential unicorns waiting in the wings are software and robotics platform GreyOrange, payments provider Pine Labs, online car marketplace CarDekho, health tech platform Practo, online furniture company UrbanLadder, online grocer Grofers, fintech start-up LendingKart and online truck aggregator Blackbuck.
Going forward, industry trackers expect early-stage start-ups to continue to command steadily increasing access to funds, as venture capital firms and private equity players begin warming up to bets in the Indian start-up segment.
In fact, a report by Venture Capital firm InnoVen Capital notes that the year 2019 had seen a doubling in the quantum of funding secured by earlystage companies. The number stood at Rs 693 crore in 2019 compared to Rs 334 crore in 2018, driven by a 22 per cent increase in the number of deals and a 70 per cent increase in deal size.
"Early stage investment activity has been very robust this year, with increased deal flow, bigger transaction sizes and higher valuations," said Ashish Sharma, chief executive officer, InnoVen Capital India, adding, "the competitive intensity in early stage has gone up, with a large set of institutional and angel investors looking to find the right opportunities".
This trend is only expected to continue over the new year. However, the country’s larger companies may well see more stringent standards being applied on them by investors as exit strategies begin taking more precedence.
HIGHRADIUS FIRST UNICORN OF 2020
AI-based back-office services platform HighRadius became 2020’s first Indian unicorn when it raised USD 125 million at a valuation of USD 1 billion this month. The Series B growth funding round was led by San Francisco-based private investment firm ICONIQ Capital and existing investors Susquehanna Growth Equity and Citi Ventures also participated. Headquartered in Hyderabad and Houston, the SaaS firm is the 25th Indian start-up to become a unicorn. It was co-founded in 2006 by Indianorigin entrepreneur Sashi Narahari