Has the Pandemic Led To New Opportunities To Create Unicorns?

It is imperative to understand what caused the bolstering of the sector enough to drive high-scale valuations when businesses across the world were finding it difficult, even to sustain

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India at present has 83 Unicorns and 50 per cent of them were created just last year in 2021. The year witnessed exponential growth with 42 Unicorns being created at a time when the world was fighting a wave of the pandemic and had just recovered from a previous wave. India has, already, catapulted to become the world's third-largest startup hub and with the rate of emergence of the Unicorns, it is poised to take the global startup ecosystem by a storm.

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When the term, Unicorn, was first introduced by Aileen Lee in 2013, the world could only show a collective meagre number of 39 exclusive startups that had attained this status. The term denoted an elite club that a very few had access to! Today, as we speak, India has become a Unicorn hotbed with the numbers in 2021 tripling from 11 Unicorns coming into being the year before in 2020.

It is imperative to understand what caused the bolstering of the sector enough to drive high-scale valuations when businesses across the world were finding it difficult, even to sustain.

Digital adoption

One of the most critical reasons was that the pandemic made people realize the criticality of technology and consequently, accelerated the pace of digital adoption in India. Startups are usually incepted with the idea of providing a bridge that matches the supply and demand gaps. They have the unique ability to solve existing problems by leveraging state-of-the-art technology as well as create new categories, products, and services. Technology has been at the core of startups across sectors – Fintech, Insuretech, Cleantech, Edutech, Foodtech, Logistics, eCommerce, Social Commerce, Proptech, Agritech, Biotech, the list is endless.

Both retail and institutional customers now started relying more on technology to stay connected in an otherwise disconnected world. Retail merchants started leveraging digital wallet services and customers were increasingly shopping online for all their needs – big or small. The retail audience did not prefer stepping out any longer and food, groceries, toiletries, cosmetics, medicine, and apparel were all ordered online. Sensing the demand, the supply side immediately witnessed an uptick.

Larger marketplace without boundaries

The increased adoption of technology prompted by the pandemic, coupled with the access to affordable data and smartphone proliferation in India has led to the boom of startups mushrooming the length and breadth of the country. Startups from tier 2 and 3 cities, that did not have access to a large audience base could suddenly leverage the lack of boundaries created by the digital world. Similarly, the startup from metro cities also started gaining foothold beyond the metros. This encouraged them to explore newer markets and target audiences, leading to their expansion in toplines, bottomlines, and overall balance sheets.

These startups know the on-ground reality of the challenges faced by people or businesses from marginalized markets. Unfortunately, they continued to remain underserved despite the fact that a majority of our country's populace comes from these territories. There lay an immense blue-ocean opportunity that these startups could capitalize on and this helped them enhance their marketshare as well as market valuation, especially during the pandemic.

Increased investor interest and mentorship

Gone are the days when the investors would wait for an organization to succeed and then invest their money, time, and energy in it. Today, there has been significant growth in the number of early-stage institutional investors who wish to see capital growth over the life cycle of the business. Furthermore, these investors are helping in democratizing investments by guiding retail investors including HNIs and those from tier 2 and 3 markets on lucrative deals.

With the funding raised, investors can now gain access to all elements of the underlying infrastructure that helps in creating a robust ecosystem. Resources – capital, human, technological, operational – can now be utilized for optimum outcomes. Similarly, the startups get access to a large group for networking to scale up. Most importantly, investors can help mentor startups at every stage to help them avoid pitfalls and build on their strengths.

Opening up the startups to the public through uber-successful IPOs is also aiding in the scaling up of these businesses to achieve the Unicorn status.

Today, an increasing number of Unicorns are transforming the way we visualize the world, by making it more empowering and acting as an enabler. They also force existing businesses to reimagine their models, providing best-in-class solutions. Overall, this benefits the end consumers who now have access to the world at their fingertips. With increased investor interest, prompting the growth of Unicorns in India, we can estimate the landscape to expand at a breakneck speed and accelerate India towards a $ 5 trillion economy.