2021 could be the best year for Unicorns

ByVineet Sachdev

May 20, 2021 11:04 AM IST

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Unicorn companies are described as a privately held startup company with a valuation of over $1 billion. The term was first popularised by venture capitalist Aileen Lee in 2013 to describe rare technology startups that were valued at more than $1 billion

Unicorn companies are described as a privately held startup company with a valuation of over $1 billion. The term was first popularised by venture capitalist Aileen Lee in 2013 to describe rare technology startups that were valued at more than $1 billion.

Representational Image. (Getty Images/iStockphoto)

While new tech-based companies created new categories of businesses, the Covid-19 pandemic has only ensured that many more segments of businesses are conducted online, and technology-based start-ups proliferate into new areas. A report from CB Insights has given detailed data on Unicorn ecosystem in India and across the world. Here is a brief summary of the findings.

Paytm is India’s highest value Unicorn, seven more were added to the Unicorn list in 2021

In India, the top three Unicorn companies are One97 Communications (the owner of Paytm), the ed-tech based Byjus, and travel-based Oyo rooms. Their valuations are 16, 13 and nine billion dollars, respectively. Seven Indian companies have entered in this list in the first four months of 2021. They are CRED, Meesho, ShareChat, Digit Insurance, Five Star Business Finance, Infra.market and Groww.

The US has more Unicorns than India and China put together

What makes Unicorns unique is the fact that they are able to attract large amounts of capital funding from venture capitalists. In a way, this is supposed to reflect the premium on the business idea and the technology to execute it rather than current performance. As is to be expected, networking with potential investors is crucial factor here. Data from the CBS Insights report shows that United States (US) is the world’s best place for Unicorns to get investment followed by China and India.

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At 337, US has share of 52% of the total Unicorns with a combined value of around 1.1 trillion dollars. China has 138 unicorns that are valued over $500 billion put together. India, which has 31 unicorns, is ranked third in the global Unicorn list. The Indian Unicorns are valued at $106 billion put together.

2021 saw the highest growth in number of Unicorns

The CBS Insight report gives details on Unicorns since 2010. The total number of Unicorns has increased from one in 2010 to 654 until April 2021. The year 2021 saw the highest number of Unicorns being created during this period (till April 22). Between January and April 2021, 88 companies achieved Unicorn status in the US, making it the best year in history of US Unicorns. China’s Unicorn growth peaked in 2018, when it added 42 companies to the list of Unicorn. Only two companies have added themselves to the Unicorn list in China this year.

Data shows that for most private companies, getting over a billion-dollar valuation from investors is recent phenomenon. Out of 654 companies in the dataset, over 75% companies entered into the unicorn category since 2018. Since 2018, each year, 125 private companies became unicorn each year except in 2020(when it was 122). 2021 is an extraordinary year for such companies. In the first four months of 2021 itself 125 companies have entered into unicorn categories.

Which business category do most unicorns enter?

Fintech and Internet software services are the most popular segments for these private businesses. More than 100 unicorns in the world are in each of these two categories followed by e-commerce and direct-to-consumer segment that has a share of 12% such companies. Fintech companies such as Paytm redefined the payment industry in India. Other categories where these unicorns are present are Artificial Intelligence, health and mobile and telecommunications.