India's start-up ecosystem had some reason to cheer in 2022 despite the economic headwinds facing the world. According to a report from Tracxn, a global start-up tracking platform, 23 companies entered the unicorn status in 2022 of which 13 even managed to stay profitable.
Unicorn is a term used in the venture capital industry to refer to a privately held start-up company that has reached a valuation of $1 billion or more.
The start-ups that entered the unicorn club in 2022 include software as a service (SaaS) platforms Fractal, Uniphore, Hasura, Yubi, Amagi, CommerceIQ, Open, LeadSquared, and ElasticRun, edtechs LEAD School and Physicswallah and blockchain company 5ire.
They were joined by Drawinbox, DealShare, Livspace, XpressBees, Purplle, ShipRocket, Tata 1mg, Oxyzo, Games24x7, Molbio Diagnostics and OneCard.
The report also mentioned the top five unicorns of January 2023 based on their total valuation and raised capital. Molbio Diagnostics, a healthcare start-up, topped the chart with total funding of about $120 million in a series C round.
Tata 1mg, a healthcare e-commerce platform owned by Tata Digital, raised about $230 million with a total valuation accounting of $1.25 billion. ShipRocket, 5ire and OneCard took the third, fourth and fifth positions respectively.
Interestingly, only one out of the top five unicorns attained profitability in the year. Alakh Pandey’s Physicswallah was one of them.
Starting out as a Youtube channel in 2014, the edtech currently offers courses for students between classes 6 and 12, Joint Entrance Exam (JEE), National Eligibility cum Entrance Test (NEET) and various other entrance exams. It has reportedly mentored over six million students and has over 13,700 video lectures on its platform.
Oxyzo, Amagi and CoinSwitch are other unicorns that continued to make profits in the country.
As reported by Outlook Start-Up on January 11, global investors are still optimistic about the potential of the Indian start-up ecosystem despite the global slowdown and funding winter.
Funding winter refers to a period of market correction in capital inflow, which lowers the probability of start-ups getting higher valuations in the short to mid-term.
Preparing For The Worst
As fears of recession loom in 2023, unicorns are bracing themselves for funding challenges with poor valuations. Several start-ups have laid off employees and discontinued their non-profitable verticals as part of their cost-conservation approach as they focus on profitability.
Funding dipped globally as investors started to become cautious about the financial health and profitability of the companies they extended their capital to. Funding to start-ups in India declined by 33 per cent, the lowest in two years. China reported a 54 per cent dip in funding while Europe, the Middle East and Africa (EMEA) region saw investments go down by 21.7 per cent.
In the UK, funding to start-ups dipped by 18.8 per cent whereas, in the US and Europe, it went down by 28.8 per cent and 24.6 per cent respectively.
On the brighter side, consumer-oriented start-ups emerged as a favourite for investors in India, garnering a total investment of about $11 billion. This was followed by sectors like enterprise applications, fintech, retail and transportation and logistics tech.