Unicorns in India

A unicorn is a startup private company that has a valuation of over $1 Billion. In Indian rupees (at Rs.74/USD), a valuation of over Rs.7400 Crores. There are more than 700 unicorns across the globe and as of date, India has 52 unicorns.

I was curious to know the meaning of unicorn when I heard it first. A unicorn is a mythological animal resembling a horse or a goat with a single horn on its forehead. It’s a rare animal, aptly named for highly valued startups. It is a rarity. I subscribe to this idea. The startup is a rare animal on many counts – the higher the sales, the more the loss; the higher the loss, the more the valuation. Adding more clients means adding more to the loss. Have you heard of any sane business operating this way? Indeed, the startup is not just a rare but exotic animal too.

While on the subject, another point to note – What does valuation mean? Should the sales of the company be over Rs.7400 Crore? Or should the profit be over Rs.7400 Crore? Not either one. Valuation means the company’s worth. How can a loss-making startup be worth thousands of crores? You will be surprised to know that the valuation is based on future business prospects! It’s somewhat a hoax, entirely based on excel manipulations!

Indian Unicorns – Some of the core facts concerning startups. Totally 52 of them garnered Rs.3,46,320 Crores worth of investment. The average time taken by a startup to hold a Unicorn tag is 8 years. 10 Unicorns in India are in the E-Commerce business. Bangalore alone has produced 21 unicorns (40% of India’s tally)! Have you heard of Byju’s? They are valued at Rs.1,22,000 Crores. Flipkart alone has received Rs.53,280 crores. Friends – The unreasonable discounts, absurd freebies we get on all our E-Commerce buys are coming from these investments!

Who is burning so much money? The major Venture Fund investors are Tiger Global, Sequoia Capital, SoftBank, Accel, Blume Ventures, SAIF Partners. They have invested in Dream11, PharmEasy, Razorpay, Ola, policy bazaar, Lenskart, Firstcry, Cars24, Cred, Paytm, Dailyhunt, Oyo, Meesha, Delhivery, Inmobi, ShareChat, so on and so forth.

What should we call when Unicorns get listed on the Stock Exchange? They are grown-up boys from Unicorn-hood to Adulthood. They are called ‘Graduated Unicorns’

What if the valuation soars to $10 Billion? They are called Decacorn

What if the valuation soars to $100 Billion? They are called Hectocorn

What if the company fails and valuation becomes ZERO? They can be called Popcorns!

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 25+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional and Registered Valuer (F&SA).Prasad welcomes your comments and questions. Please email him at [email protected]

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Sriram Iyengar
Sriram Iyengar
1 year ago

Nice article

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