Article on "Unicorn Startups" by Saima Sarwar

 Unicorn Startups

Saima Sarwar, Roll No.- 53

B.Com Semester VI, Session 2019-22

Introduction

In Business, the word “Unicorn” is defined as those privately held start-up companies valued at over US$1 billion. This term was first used and get popularised in 2013 by venture capitalist Aileen Lee who choosed the mythical animal to represent the statistical rarity of such successful ventures. There are more than 1,000 unicorns around the world, as of March 2022, according to CB Insights. Collectively, they are valued at $3,516 billion total. Start-ups worth over $1 billion are called unicorns because they are so rare often, these companies have seen skyrocketing success, which has launched them into almost a mythical category, since they are so rare.

Main Content

With the development of technology, the number of global startups has been increased. Among the startups, firms that achieve $1 billion or more valuation are especially called unicorns to describe the rarity of highly successful startups. Becoming one of the unicorn startups brings notable growth with respect to a chance of financial capital and reputation because it is clear evidence of the firm’s potential competitiveness. Unicorn startups are generally of small size, which facilitates strategic decision making and implementation of quick practical measures. Their founders and leaders are usually experienced entrepreneurs, who have often dealt with high-risk situations and failures. They are financed by venture capital companies, which pressure them for quick development of a new business and foster innovation and launching of new products and services. Innovations offered to target audiences are digital, which reach the market leveraged by digital platforms widely spread ideas and information through social networks; that is much faster than traditional businesses that struggle and invest in the conventional marketing of products and services.

Unicorns are able to respond dynamically to adversity, especially because they can adapt BMI (Business Model Innovation) for making specific digital innovations as solutions to meet market needs quickly. This is because the business model is built around a single digital platform or software, which is very fast and cheap to develop and promote.BMI in digital startups is a gap in literature. It is an important step for digital startups to survive in the initial stage of their journey but should not be restricted to that phase. 

It is continuously necessary, especially for adopting innovative strategies or redefining the strategy to withstand crises by seeking economic results different from those already used. While work from home during pandemic fueled the growth of digital business in India, the incident also resulted in a long unicorn list. Mainly three factors, a thriving digital payments ecosystem, large smart phones user base and digital-first business models, have come together to attract investors. Tech companies, which have become household brands, are contributing to the unicorn boom in India as smartphone penetration and digitization of commerce in every aspect of life has increased manifold during the pandemic. Besides fintech, e-commerce grocery, SaaS and marketplace players are contributing the most to unicorn universe.

As of 05th May 2022, India is home to 100 unicorns with a total valuation of $332.7 Bn. The year 2021, 2020, and 2019 saw the birth of the maximum number of Indian unicorns with 44, 11, and 7 unicorns coming each year, respectively. COVID-19 has caused a great amount of socio-economic suffering globally, but during this time, the resilient Indian Entrepreneurs have worked effortlessly to not only contribute to the economy but to also contribute toward COVID-19 relief efforts. Indian unicorns are also exploring the public listing avenues as a next step to realize the growth potential. Some one of big unicorn names that offered an IPO include Zomato, Nykaa, PolicyBazaar, Paytm and Freshworks, while many are already in line such as Delhivery, Mobikwik and CarDekho. Today, 1 out of 10 unicorns globally have been born in India. Overall, 2021 is experienced an exponential boom when it comes to startups entering the unicorn club. This is a testament to the vibrant startup ecosystem present in India. Till date, 2022 has witnessed the birth of 14 unicorns with total valuation of $ 18. 9 Billion (As of 05th may 2022).

Conclusion

In conclusion, Unicorn startups are the most popular and widely used term nowadays; besides this it has a great impact on socio- economic growth and development. With the increase in digital world, the need of innovative startups which makes the life much easier is necessary. Innovative startups are establishing with promising ideas, in which investors are interested in investing their funds and this all resulted in the birth of unicorn startup worth $1 billion. And its rarity is decreasing day by day because of rapid increment in number of unicorns nowadays. In terms of the number of unicorn startups, India ranks third position after US and China in the whole world, which shows the passion for growth, success and development that Indian startups have. In upcoming years, we are expecting many more startups to enter in the unicorn list.

Reference- Google

Websites- Wikipedia, investopedia, CBinsight, investindia