Why in the news?
The 'Global Unicorn Index 2024' released by research group Hurun.
Key-findings of the report
- In 2023, India had 67 unicorn startups (68 in 2022) and placed third globally. E.g., Delhivery, Nykaa etc.
- USA led with 703 unicorns, followed by China with 340.
- The US has 50% of the world's known unicorns followed by China (25%) and Rest of the World (25%).
- Founders from India produced more offshore unicorns than any other country, co-founding 109 unicorns outside of India compared with 67 in India.
- A unicorn startup is a privately held company, without any listing on public exchanges, valued at $1 billion or more and supported with venture capital.
- Gazelles: Start-ups most likely to 'go unicorn' within 3 years.
- Cheetahs: Start-ups most likely to 'go unicorn' within 5 years.
Factors behind decline of Unicorn in India
- Sustainability of the models: High cash burn rates and heavy discounts to attract customers have eroded profitability and raised concerns about the long-term viability of these companies.
- Overvalued startups: Several Indian startups were too richly valued and could not justify their valuations.
- Paytm's stock has gone down by 80 per cent since its 2021 listing.
- Slowdown in funding: Funding to Indian startups declined significantly in 2023 compared to last year.
Measures to be taken
- Sustainable business models: Unicorns will need to prioritize profitability over rapid expansion, invest in technology and innovation, and diversify their revenue streams.
- Fair Valuation: There is a need for better regulation of valuation.
- Regulatory environment: Simplification and rationalization of legal and compliance requirements can provide stability and confidence to the Unicorns in future.