Report: Several Indian Startups May Lose Their Unicorn Status
Because of decreased funding and a reduction in late-stage deals, several Indian startups may lose their unicorn status soon.
Several experts stated that startup founders are trying to avoid raising money due to unfavourable market conditions. Those startups who have already taken the “plunge” may lose their unicorn status, per a Financial Express report (FE).
For the unversed, a unicorn is a company with a valuation of over $1 billion.
Indian Unicorn Startups
Around 7 Indian startups have lost their unicorn status in the last five years, as per a report by private market tracker Venture Intelligence. Between 2018 and 2022, around 105 Indian startups joined the coveted unicorn club. Now, the active number of unicorns has been reduced to 84.
A consultant told FE,
“Most big startup investors in India are global tech investors, and they usually compare some of the domestic Indian startup valuations with tech stocks in the US, Europe, Chinese and Japanese markets. So, they (the global VCs) will mark down Indian holdings if tech stocks fall, which is a trickle-down effect from public to private markets.”
Seven startups, including Quikr and Hike, have lost their valuations due to investor markdowns. Additionally, startups like Paytm Mall, Snapdeal, and Shopclues lost their unicorn status due to a fall in valuation by their investors.
As per FE, SoftBank, which is an investor in several Indian startups, has also marked down the valuations of over 280 firms.
Pankaj Makkar, managing director at Bertelsmann India Investments (BII), said,
“Most startups which are currently valued at more than a billion dollars should not be more in that $800 million or so…In the last two years, we were in a very high valuation environment both globally and domestically. And now due to US tech stock correction, some of that will reflect on the Indian companies and hence, down rounds may happen.”
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