unicorn startups: Average unicorn time for startups down to 5.5 years: Report

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The average number of years required for an India startup to become a unicorn declined from 8.4 years in 2022 to 5.5 years in 2023, according to a report by Orios Venture Partners.

India ranks third on the list of most unicorns birthed by a country, but only two companies hit the $1-billion-plus valuation last year. The new economy of startups had contributed 15 public listings so far, the report added.

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Orios Venture Partners founder and managing partner Rehan Yar Khan told ET that even in a tough liquidity environment with most valuations going down, it is still a feat for companies to be achieving fresh unicorn valuations showing growth of the respective market.

“Take Zepto as an example that became a unicorn last year. In order to get there, the company needs to show a certain amount of sales. This shows that the market has become so large that it can get a billion-dollar valuation as it’s not just a function of finance and liquidity,” Khan told ET.

Also read | Unicorn drought ends as Zepto raises $200 million at $1.4 billion valuation

After a hiatus of almost a year in a number of months, in August 2023, India had finally minted a new unicorn with Mumbai-based quick commerce startup Zepto. Founded by Stanford University dropouts Aadit Palicha and Kaivalya Vohra, the startup bagged a fresh $200 million funding led by new investor StepStoneGroup at a valuation of $1.4 billion.

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Apart from Zepto, fintech firm InCred had turned unicorn after raising $60 million in a Series D round from new and existing investors in December 2023.“Stages of a company from being founded, turning unicorn and then the exits are important to record to track how large the markets they serve become over a period of time,” Khan added.

The VC firm, which makes about 10-12 new investments each year, stuck to making only seven in 2023.”In the first half of 2023, we did about six new investments and in the second half we did just one as we could not find a lot,” Khan told ET.

As per the report, titled Indian Tech Unicorn and Exits Report 2023, there were a total of 123 exits by startups during the year comprising the likes of Mamaearth and Ideaforge — both of which went public — versus 229 in 2022.

“We saw a lot of these exits at a fund-level in the form of secondaries, very profitable exits. This report of course captures exits of the companies that have moved on to the next stage of liquidity beyond funding and secondaries through public listings and such, not so much from venture capital firms’ exits,” Khan added.

Top acquisitions in 2023, as part of the exits in the report, included OLX Auto‘s sale to CarTrade for $67 million, Texts’ sale to Automattic for $50 million, Plix’s sale for $45 million to Marico, Edamama’s sale to Reliance Retail for $44 million, and TrillionLoans’ sale to BharatPe for $36 million in an ascending order.

When asked about how conducive the markets currently seem for startup exits, Khan said: “Globally, most acquisitions actually fail. About 80% to 85% of acquisitions fail for a variety of reasons. A lot of the companies are just not able to make acquisitions work. These are very founder-driven approaches that differ from company to company.”

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