The charge of India’s unicorn brigade


Six years ago, when venture capitalist Aileen Lee coined the term “unicorn”—to define the extreme rarity of startups valued north of $1 billion—there were just 39 in the US and only three Indian unicorns. Today, the US and China are home to over 200 each, while India has roughly 30!

Since mobile advertising company InMobi became the country’s first unicorn in 2011, there had been only the odd spotting. But in the past two years, Indian unicorns have smashed through the barn door—10 in 2018, while the class of 2019 has:

  • Eyewear retailer Lenskart
  • E-grocer BigBasket
  • Fantasy gaming platform Dream11
  • Cab aggregator Ola’s EV company Mission: Electric
  • Logistics startup Rivigo
  • Logistics startup Delhivery
  • Cloud data protection firm Druva
  • Enterprise contract management firm Icertis
  • Healthcare analytics company CitiusTech

Indian unicorns, such as now-household names Flipkart and Ola, benefited from the spread of internet-connected smartphones and cheap cloud computing. They built empires by bringing existing businesses like shopping, taxis, food delivery, hotels, etc., online. Of course, there was also a stream of investors ready, willing, and able to fund startup dreams.

It takes two to tango. So, too, the disruptors of the decade: Ola and Uber in ride-hailing, Flipkart and Amazon in e-commerce, Swiggy and Zomato in food tech, OYO and SoftBank in hotels… oh wait!

Amidst all this brouhaha now, it is easy to forget that things weren’t always like this. As we recapped earlier this year:

“Just ten years back, there were a handful of startups and a far smaller bunch of investors. A $100,000 funding round was considered respectable and VC decisions took months to move from interest to mandate.

So how and why did things change?

If one were to look back and connect the dots, it wouldn’t be farfetched to conclude that if there was one event that catalysed this revolution, it would be when Lee Fixel, then head of Tiger Global, invested $10 million into a then largely unknown online bookseller called Flipkart.”

That was in mid-2010. Tiger Global made nearly 50 early-stage bets in the early part of the decade and irrevocably changed the three Vs of venture investing in India.

  • Value: A $10 million round was unheard of at that time
  • Volume: One fund invested in 15 companies at most
  • Velocity: Tiger invested within hours, rather than months, of a meeting

Fixel invested massive sums in e-commerce startups like Ola, classified ads platform Quikr, e-tailers like Myntra and ShopClues. Ola and Quikr became unicorns in 2014, the same year Flipkart bought fashion e-commerce portal Myntra.

But potential Indian unicorns really blossomed after two seminal moments in 2016. The first was in September when Reliance Industries launched Jio and took dirt-cheap internet data into every nook and cranny of India. Then, in November, the Indian government replaced 86% of currency notes with a new set—a “demonetisation” that sparked the digital payments wave.

Suddenly, one could order and pay for clothes, food, taxis, hotels, insurance policies, and medicine using just their smartphones. All startups needed to keep seducing customers with discounts and cashbacks was a benevolent investor.

No backer was more so than SoftBank.

Role Of The E-Commerce Startups

The Masayoshi Son-led firm led mammoth funding rounds in a host of e-commerce startups in the latter half of the decade. In fact, SoftBank-led rounds have created six Indian unicorns in the past two years. Lenskart, Delhivery and Ola’s Mission: Electric were the beneficiaries in 2019.

In 2018, they were insurance aggregator PolicyBazaar; Paytm Mall, the e-commerce arm of payments company Paytm* (also a unicorn); and OYO, which claims to be the world’s third-largest hotel chain.

SoftBank has backed at least one major sector disruptor and, in the process, created not many unicorns. Why? As we summed up in 2017:

“But the magnitude of the ($100 billion Vision) Fund is a double-edged sword. On the one hand, SoftBank can enter pretty much any deal it chooses to but on the other, it can’t afford to miss having a stake in any of the hot sectors/startups that could emerge as the totemic companies of tomorrow, essentially ending up with an index fund of the most important startups in the world.”

And it has. Nearly all B2C (business-to-consumer) unicorns are backed by SoftBank. But it has been conspicuous by its near-absence in one rising space. B2B, or business-to-business.