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The Growth of Unicorns
Using a novel database, the article examines the characteristics of Indian unicorns in a global perspective. The total valuation of unicorns currently approximates $3.4 trillion. Multivariate regressions highlight the importance of city start-up environment, finance and cost as key drivers. India does not appear to exhibit a significantly different valuation from its global peers, although when looked at with respect to the gross domestic product, its valuation is 10% higher, on average.
The views expressed and the approach pursued in the article are strictly personal.
On an otherwise inauspicious but palindrome date—2 February 2022—the world reached a total of 1,000 unicorns. Productboard, an internet software and services company based in the Czech Republic, became the latest entrant in this hallowed list, making it the first time that this number has reached four digits. Unicorns, a term coined over a decade ago when start-ups with a valuation of $1 billion and above were the cynosure of all eyes, have been gaining visibility as their growth is now approaching the scale of “industrial agriculture” (Huet 2022).
Although the number of unicorns was increasing even before COVID-19, the pandemic reshaped the process in a significant way. Driven by rock-bottom funding costs and ample investment opportunities, especially for venture capitalists sitting with a stockpile of cash, start-ups utilised the time and money to take advantage of the mojo in the sale of software of all kinds, driving home the advantage. Combined with the three positives of timing, luck and execution, start-ups drove home the advantage: from around 550-odd at end-2020, it nearly doubled, touching 1,036 in early 2022. With a combined valuation of $3.4 trillion, it equals roughly 3.5% of the global gross domestic product (GDP) in 2021. These unicorns are spread over 40 countries, span a wide range of sectors, and have so far raised a total of $583 billion.
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