Article on "UNICORNS STARTUPS" by Arunima Konar

UNICORNS STARTUPS

Arunima Konar, Roll No. 22

B.Com Semester -VI (2019-22)

Unicorns do exist! but maybe not the kind you are thinking off. So, today you are about to get a special look into the land of unicorns! A Unicorn Start-ups.
Definition of unicorn start-ups:-
Unicorn start-ups means a start-up that is privately -owned with a valuation exceeding $1 Billion.
 
The question arises from where this word “UNICORN” came?
 
As, “UNICORNS” particularly means “RARE”. It’s a mythical creature which is resembling a white horse with a single horn on its forehead which is quite hard to find.
              Now, it is very interesting to know WHO and WHEN this “UNICORN” term coined. So, AILEEN LEE, Cowboy Ventures’ founder, coined this term first in 2013 while referring to 39 start-ups having a valuation of over $1 billion. Aileen chooses this term to highlight the statistical rarity of such start-up companies. Although the definition of unicorn start-up has not changed, the number of unicorns in INDIA and the world has increased considerably. High growth start-ups with big valuations have been around for a while, but the name “unicorn” is new. Lee wanted a word that would capture the essence of a group of tech start-ups that carried valuation over $1billion and were founded in the US after 2003. The “UNOCORN” is particularly dedicated to these start-ups only because Lee calculated that 1 in 1538 software and internet companies actually made it to unicorn hood – or 0.7%.
 
Feature of unicorn start-ups: -

1.    Tech-based: - The main feature of growing unicorn start-ups at this high pace for the past few years is, these start-ups are utilising the flood of new technologies and explosion of social media. The core business model of many companies runs on technology. Like, the first unicorn start-up of INDIA, InMobi which is a tech-based company offering mobile advertisement service, now globally, which gets the crown of unicorn start-up in 2011.
2.    Pioneers in their niche: - Many start-ups have achieved the status of a “unicorn” by venturing into a field not known or targeted before. Being the starters in a specific industry has given them an edge against the competition to ensure consistent business growth.
3.    Given forefront priority to the consumer comfort:-  The market has completely shifted from product oriented to consumer oriented. Now every company is focusing on consumer needs. Like, OYO rooms have changed the way how people used to book accommodation while travelling.
4.    Privately owned:- Mainly all of the unicorns are privately owned which get their valuation of $1 billion.

Valuation of Unicorn start-ups:-

Since the publication of Lee’s “Tech Crunch” article it has become widely used to refer to start-ups in technology, mobile technology and information technology sectors.
 The value of unicorn is generally based on how investor and venture capitalists feel they will grow in future, so it all comes down to longer-term forecasting. This means their valuations are nothing to do with the way they perform financially. In fact, many of these companies rarely generate any profit when they first get running.
Generally, valuation of these unicorns usually comes from funding rounds of large venture capital firms investing in these start-up companies.

Current scenario of these unicorn start-ups:-

·      In World -  Three short years after Lee’s article published , the unicorn population has shot-up. While still rare, there are more than 1068 unicorn start-ups around the world currently. In 2021 alone, 519 of these privately held unicorn start-ups were ‘’born’’. With a total of 100 unicorns, India has the third-highest number of start-ups valued at a billion dollars or more. However, it lags behind eternal rival China, and the world’s current unicorn hub, the US, by quite some distance. In fact, the US has more than 8 times the number of unicorns as India.
·      In INDIA – The country is just displaced UK in case of unicorn start-ups. The unicorns are flourishing in the fast- paced and dynamic economy of today. These start-ups are not only developing innovative solutions and technologies but are generating large-scale employment. With 44 Indian start-ups joining the unicorn club in a single year (2021).Not only that Indian start-ups Ecosystem has seen exponential growth in past few years (2015-2021). 9X increase in the number of investors, 7X increase in the funding of start-ups, 7X increase in the number of incubators.
 
GLIMPSES OF INDIA’S TOP 10 UNICORN STARTUPS :-
1.   Flipkart
2.    BYJU’S
3.    NYKAA
4.    BharatPe
5.    Paytm
6.    OLA Cabs
7.    Zomato
8.    Policybazaar
9.    Droom
10.ShareChat
 
Conclusion :-
As of December 2021, the US dominated the market with the largest number of unicorns. China is expected to slow down from current level of unicorn births, but there is a significant growth in India, UK, Germany. Technology is the leading sector with the highest share of potential unicorns, followed by financial services, pharma & healthcare and retailing. It is expected that these non-leading sectors can have 80% of potential unicorns in coming years.
   
 Sources:-
1.    https://www.inc42.com/
2.    https://www.investopedia.com/
3.    https://www.investindia.gov.in