Indian startups are fast-moving in the race to achieve the ‘unicorn’ status. As per a recent report by Credit Suisse, globally, India is home to the third-largest set of unicorns. It is currently behind the US and China, with a total valuation of $90 billion. The report says that currently, India has 100 unicorns with a market capitalization of $240 billion. Further, the report said that startups in India accounted for around 6-7 percent of new firms. This ratio, as per the report, has seen an increase over the past decade to incrementally 10 percent.
According to Neelkanth Mishra, the Co-Head of Equity Strategy, Asia Pacific, and India Equity Strategist at Credit Suisse, its research found 100 unicorns in India in a diverse set of industries. These include technology and tech-enabled sectors, such as consumer goods and pharmaceuticals/biotech who have benefited from accelerating and formalization of digital adoption. Besides financial technology (FinTech), e-commerce, education technology, mobility companies and food delivery – there is a growing number of firms in gaming, Software-as-a-Service (SaaS), new-age distribution and logistics, biotech, modern trade, and pharmaceuticals industries.
Nearly half of BSE500 are in Delhi, Mumbai, and Bengaluru. About 20 percent are outside the top 10 cities of India. The growth of unicorns varies across the different parts of the country, as per the report. Bengaluru, according to the report, is the dominant centre.
According to Credit Suisse’s report, there are a few firms of old vintage in conventional businesses like Parle Biscuits or the NSE, but most of these firms were formed after 2005. However, 13 percent of the BSE500 firms started after 2000 and 36 percent started before 1975. This, according to the report, indicates that new company formation had been a slow process.
Further, the report said that Indian FinTech companies have attracted $10 billion worth of capital and are now leading India’s startup ecosystem. Ashish Gupta, the Head of Asia Financials Securities Research and Head of India Securities Research at Credit Suisse said that digital payments are leading the FinTech scale-up and have grown 10x in the last five years. According to him, digital payments currently have a 30 percent share which totals to $450 billion.
Currently, India is the 8th largest market, globally. This has happened due to the growing market capitalisation of listed equities. India is only 7 percent away from becoming the 6th largest market. As per the report, the equity cult in India– aided by supportive policies and infrastructure– has not only increased the number of active investors, but has also seen more corporates get their firms listed at the bourses. According to Credit Suisse, the number of listed companies with a market-cap above $1 billion has increased to 336 from 178 in 2010 and 72 in 2005.