Unicorns In India: India needs as many unicorns as possible to be ahead in the race against poverty, and unemployment as the growth of a nation is closely bonded to how your Industry works. what are Unicorns?
Any privately held startup whose valuation is above 1billion USD is termed Unicron. Remember the word Valuation. A valuation can be determined in various ways like assets and liabilities, PE, and many other things. there are no set rules on how a company will value in India, Looking at the past two years of IPO and the way a company gets evaluated is a no-brainer.
A company that spends Rs 7.5 to earn 1 Re profit is evaluated at 6 billion USD. If I were the VC I would pull all the investment made so far and ask him to make a good product and then come back. I am not able to understand how a company that has never made any profit has been evaluated at 6 billion USD. Have no assets either.
Spending money on ads and trying to play cashback and reward points games is way older now. Business can be made in several ways and it’s not necessary that every business will work in the way how other has worked.
I am neither a CEO nor I have found any company but looking at the trend I feel worried. If the companies get evaluated at some random figure that they do not deserve, people won’t invest in the markets anymore.
Growth can be shown in many ways and it can be manipulative, I can have a 100k customer base and still, my company can be in a loss vs 10 k genuine customers who can bring money on the table and keep me out of the VC trap.
Now the game is of tech, especially when it comes to fintech. If your platform is way out of anyone’s league you do not have to bribe customers to come to you. I have seen companies giving rewards that they can not retrieve from the customer using their portal for a year. If you have to burn the VC money and showcase the growth to them, put some sense in your head and try building a product and an ecosystem around it.
If you pull out the data of the last 10 IPO I do not think you will get more than 2 IPO that will outperform any assets class. IPOs are considered a last resort to pay your debt off or get rid of an annoying/irritating investor. If this trend continues, I do not think this will be good for people investing in the market and for the businesses planning for an IPO. A well-deserved company can underperform.
Everyone is in the race of becoming a Unicorn. We have close to a hundred unicorns in India and out of that only 18 are profitable. 18% conversion rate is way less if you call yourself a country of Unicorn. Out of these 18% profitable unicorns, 50 % are bootstrapped. Raising external money on the table brings obligation and risk to a business in an exponential way. you will be forced to do things that you have never dreamt of to bring in the growth expected by the Investor and that can harm your business long time in the longer run.
This was my two cents on the valuation and growth. I hope you liked this and please share if it’s worth it.
FAQ: Unicorns in India
What are unicorns in India?
India’s Unicorns Club: This is the Comprehensive List Of 100+ Unicorns in India. Venture capitalist Aileen Lee, a venture capitalist, coined the term “unicorn” in the startup ecosystem to describe the rareness of startups valued at over $1 billion. Ten years later, unicorns are not rare in India!
Who is first unicorn in India?
In 2011, Inmobi became India’s first. It’s been raining unicorns ever since, making India home for 100 of the estimated 1000 world-famous unicorns. Mohandas Pai (Co-Founder and Chairman of Aarin Capital), believes India could have 250 unicorns in 2025.