- In the April-June quarter of 2022, only 4 companies joined the billion-dollar unicorn club.
- There were 13 companies that became unicorns in the January to March quarter of 2022.
- The delay in unicorn creation is directly proportional to the delay in financing activities.
The ongoing financing winter has already caused a slowdown in the unicorn creation trend in India. In the April-June quarter of 2022, only four companies joined the multi-billion dollar unicorn club, compared to 13 in the previous January-March quarter. India had added 12 unicorns in the comparable quarter last year.
A unicorn is a startup worth more than a billion dollars. Some 44 startups reached this milestone in 2021 and that number is expected to increase this year thanks to the optimism in the market. Contrary to expectations, however, the April-June quarter saw the lowest number of unicorns created since September 2020.
According to business intelligence firm Tracxn, the slowdown in unicorn creation is directly proportional to the slowdown in financing activities in the Indian startup ecosystem. The investors have limited capital to invest in startups, making them even more cautious about investing in bigger rounds or money-burning companies.
Neobanking company Open Financial, software-as-a-service (SaaS) company LeadSquare, Nykaa competitor
Tracxn co-founder Neha Singh stressed that the entire delay in funding and unicorn creation has been influenced by the dip in funding rounds at a later stage. The trend of low unicorn creation and late-stage funding is likely to continue throughout the calendar year, until next year’s March quarter if the Russia-Ukraine war doesn’t cool down, Neha added.
OneCard was the only unicorn of July 2022, also hinting at the continued slowdown for this quarter.
VerSe Innovation – the parent company of Dailyhunt and Josh – raised its largest round of funding last month when it raised $805 million at a valuation of $5 billion. It was followed by Delhivery for $304 million, Udaan for $275 million, ShareChat for $255 million and upGrad for $225 million.
The slowdown in unicorn making is not just limited to India, it has coincided with a global slump in funding. In the April to June quarter of 2022, approximately 85 unicorns were added globally, compared to 129 in the same quarter last year. The number stood at 110 unicorns in the quarter from January to March.
Meanwhile, global seed funding fell 23% year-over-year to $108.5 billion in the April-June quarter of 2022.
Gaurav VK Singhvi, co-founder of investment company We Founder Circle, explained that several startups had ignored their bottom line for a long time and that the investors are now pressuring these companies to focus on their finances and numbers. “The earnings are all good, but now they’re looking at long-term profitability and livelihoods,” he added.
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