Four Businesses Turn Into Unicorn

Four businesses have turned unicorns in the June quarter during the fundraising winter. The trend of unicorn formation in India has slowed down due to the ongoing fundraising winter. Only four businesses joined the exclusive billion dollar unicorn club in the April–June 2022 quarter, compared to 13 in the January–March quarter before. In the same quarter last year, India had expanded its unicorn population by 12.

A startup with a valuation of over $1 billion is called a unicorn. This milestone was reached by 44 startups in 2021, and given the market's optimism, more were anticipated to do so this year. Contrary to estimates, the quarter between April and June witnessed the lowest number of unicorns produced since September 2020.

The slowdown in unicorn generation is strongly correlated with the decline in fundraising activity in the Indian startup ecosystem, claims business intelligence firm Tracxn. Due to the investors' limited resources, they are even more hesitant to engage in larger rounds or companies that require a lot of cash.

Open Financial, a neobanking company, LeadSquare, Purplle, a competitor of Nykaa, and PhysicsWallah, an edtech company, were the four businesses that became unicorns in the April–June 2022 quarter. Neha Singh, co-founder of Tracxn, emphasised that the decline in later-stage investment rounds has had an influence on the overall slowdown in funding and the emergence of unicorns. Through the March quarter of this year, the trend of low unicorn formation and late-stage funding is anticipated to persist.

The parent company of DailyHunt and Josh, VerSe Innovation, completed the largest investment round last month when it secured $805 million at a $5 billion value. Delhivery came in second with $304 million, followed by Udaan with $275 million, ShareChat with $255 million, and upGrad with $225 million.

There is a global funding downturn at the same time as the slowdown in unicorn development, which is not just happening in India. In comparison to 129 in the same period previous year, approximately 85 unicorns were added globally in the April to June quarter of 2022. In the quarter from January to March, there were 110 unicorns.

In the meantime, worldwide startup funding fell to $108.5 billion in the April to June 2022 quarter, a 23 percent year-over-year decline. According to Gaurav VK Singhvi, co-founder of the investment company We Founder Circle, many startups had neglected their bottom line for a while, and now investors were pressuring these businesses to pay attention to their money and figures. Revenue is great, but now they're focusing on profitability and long-term viability, he continued.