India added 23 new unicorns in 2022: Report

India is accelerating its effort to create unique start-ups and state-of-the-art manufacturing units in a bid to attract global investors. On one hand, IT segments such as the SaaS (Software as a Service)-based and fintech are gaining a momentum, however, demand for consumer tech has significantly declined. 

Photo Source: Shutterstock

New Delhi, March 16: India has added 23 new unicorns in 2022, thereby, overtaking China which has added only 11 start-ups with valuation of USD 1 billion or more. According to a report by IVCA-Bain & Co., India topped for a second consecutive year, however,  2022 number is just half of the unicorns created in 2021 when it stood at a record 44, which took the overall number to 73 in that year.

The report indicates a shift to more democratic funding geographically, since 9 of the 23 unicorns added in the year have emergedhttps://www.financialexpress.com/industry/unicorn-surge-india-adds-23-new-unicorns-in-2022-overtakes-china-for-the-second-consecutive-year/3010663/ from cities outside of the top 3 metros. This means that funding to startups in non-metros grew to 18% of the total inflows share.

Bain & Company’s annual report in collaboration with the Indian Venture and Alternate Capital Association (IVCA) was released on Wednesday. 2022 saw a recaliberation in venture capital investments in India as increasing macroeconomic uncertainty and recessionary fears affected investment momentum .

Arpan Sheth, partner at Bain & Co, has said that overall funding saw a drop in 2022, led by a decline in late-stage large deals. The ecosystem has faced foundational shifts as VCs pivoted their focus to unit economics and startups faced a challenging year with multiple regulatory challenges, layoffs and corporate governance issues surfacing.

“Over the years, the alternative investment asset class has demonstrated remarkable resilience. While 2022 marked a year that heralded PEs/VCs to adapt in the face of unprecedented challenges, it also went on to see record fund-raising and all-time high available dry powder,” IVCA president Rajat Tandon has said.

Sriwatsan Krishnan, Partner, Bain & Co, expects 2023 likely to see emergence of a more resilient ecosystem as stakeholders remain cautiously optimistic. Investors are expected to double down on early-stage deal making in emergent spaces such as gaming, health-tech, EV and AI-led use-cases.