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Startup Newsletter - Jan'24

In this Issue:


India’s Unicorn Story in Numbers

  • Only 2 Indian startups turned Unicorn in 2023, taking the total to 91, adding $2.4 Billion to overall Unicorn valuation. Meanwhile, some Unicorns like Byju’s and Pharmeasy suffered valuation cuts, bringing down the overall Unicorn valuation.

  • Over 260,000 people were employed by Indian Unicorns at the end of FY23.

  • Over 18,000 employees have been laid off by Indian Unicorns since the onset of funding winter in 2022.

  • 1 out of 5 Unicorns are profitable. About 80% of the remaining Unicorns have a net margin of up to (-100%), while the remaining have a net margin lower than (-100%).

  • 14 Unicorns managed to raise fresh equity rounds in 2023, while 7 resorted to debt funding.

  • Only 1 Indian Unicorn got listed in 2023, taking the total listed Unicorns to 8. Overall, these companies gained 32% in 2023.

  • 26 co-founders are women, having co-founded 23 Unicorns.


What if you had Invested in Indian Unicorns?


Bright spots of 2023

Amidst the brouhaha of Startups shutting shop, laying off and reporting eye-popping losses, we forgot to notice and appreciate those that continued to record impressive growth and showed utmost resilience in the face of poor investor sentiments and global macro-economic headwinds. 

We scanned through all the Unicorns to identify the bright spots in 2023. Here's how we shortlisted them:

  1. YoY revenue growth in FY2022-23 by at least 10%

  2. Consolidated annual revenue in FY2022-23 of at least ₹500 Crores

  3. Improvement in profit margins YoY

  4. Profit margin of negative 20% or better

  5. No fall in valuation

Out of the 91 Unicorns only 10 Unicorns could pass all the 5 conditions above...


What went wrong with Byju’s? – Deep Dive

Despite the present predicament at Byju's, one thing remains constant, i.e. Byju Raveendran (Co-founder and Group CEO) continues to teach thousands. Just that his subject matter has changed- a decade ago, he would fill up stadiums teaching Math, to now, teaching some of the toughest lessons of business to budding entrepreneurs with the rise and fall of his own startup, Byju's.

Here's the Edtech Unicorn's wild journey of the last 4 years depicted in a chart:


India's Unicorn Economy

India’s 91 Unicorns spent cash of over ₹300,000 crores ($37.5 Billion), posting a total net loss of over ₹67,000 crores ($8.38 Billion). Now before you write off all these expenses as “cash burnt”, let’s zoom out and look at the bigger picture.

Think of it this way, money spent by one Startup is creating a market for another. So, the huge amounts of money spent by Startups is brewing up an economy in itself comprising of stakeholders ranging from digital marketing to data security firms, from Logistics to SaaS companies, and so on. Here are a few examples to explain this better...


How much do Unicorns spend on ESOPs?

It is customary for startups to pay a part of their employee cost in the form of ESOPs, especially during their early years. This helps them to conserve cash and also to allow employees to own a piece of what they’re building. But have you ever wondered how much are startups spending on ESOPs to employees?

We ran analytics on the Indian Unicorns and arrived at a median of 18%. This means that out of their total annual employee benefit expenses, the Unicorn startups spent 18% in the form of ESOPs to employees.

  • Lowest - 1% (Lead School)

  • Median - 18%

  • Highest - 57% (VerSe)

Fun facts: Companies like DealShare, Apna and Purplle were found to be spending 17% to 20% of their employee benefit expenses in the form of ESOPs. Whereas, companies like LEAD School, LeadSquared and Nykaa spent only 1-2% on ESOPs. Interestingly, some companies which had sufficient liquidity, like Mamaearth and Zepto, chose to settle their ESOPs in cash, instead of issuing fresh stock options.

Source: Startup Indian analysis, based on latest published financial statements of 58 Indian Unicorns.


Where do Unicorns park Idle Funds?

Time and again you must’ve heard in 2022 & 2023 (59 times to be precise), that a Startup raised funds north of a hundred million dollars. Of course, all the news about mammoth valuations took the limelight, but did you ever wonder where these Startups park these fat cheques until they actually want to use them?

We handpicked 6 Unicorns which were flushed with accumulated funds of $1.51 Billion as on 31st March’23, and found out their strategy of dealing with idle funds. Here’s what it all boils down to:


How much Stakes should Founders Retain?

For entrepreneurs, there’s a lot riding on the outcome of their negotiations with potential investors. The biggest trade off being between the funds they seek from the investors and the control that they’re willing to give away in return. Here’s what we found out by churning the data of India’s 91 Unicorns:

  • Seed Stage – At the end of the seed round of funding, the founders were collectively left with a median ownership stake of 72%. However, founders of MamaEarth, DealShare and boAt retained over 90% stakes in seed stage.

  • Series A – At the end of Series A round, founders retained a median ownership stake of 52%. However, several Unicorns like OfBusiness, Upstox and Elastic Run had founders’ share greater than 70% after Series A. Whereas the founders share in Xpressbees and PineLabs were less than 20%.

  • Series B – At the end of Series B round, founders retained a median ownership stake of 35%, diluting 16% from the last round. However, in some Unicorns like GlobalBees, Acko and Slice, founders’ share was lower than 12%.

  • Series C - At the end of Series C round founders were left with a median ownership stake of 28%. The founders of only 2 Unicorns - Pristyn Care and Upstox continued to own a majority stake (i.e. >50%) at the end of Series C.

So now you have a robust benchmark to beat. If you’re diluting less than 28% in the seed stage, for example, you know you’re better than an average Unicorn. Now, on that note, let’s revise this lesson from the book ‘Venture Deals’ by Brad Feld and Jason Mendelson –

A few compromises are just a part of the game, but be sure you know exactly what you want when it comes to money and influence. Moreover, set your own limits and know when to walk away from the negotiation table.

Source: Startup Indian analysis, based on cap tables of 69 Indian Unicorns across different rounds of funding.


Gutsy Startup Predictions - 2024

  1. EV Unicorn and Cleantech funding – Atleast 1 EV startup will emerge as a Unicorn in 2024, and at least 2 cleantech startups (non-EV) will achieve $100 Million valuation.

  2. Startup IPOs – At least 2 Unicorns will hit the bourses – Ola Electric, Swiggy, Digit Insurance and Oyo being the top names to watch out for. At least 5 other non-unicorn tech companies will also list on the Indian bourses.

  3. Downround – At least 2 Unicorns will suffer a downround, i.e. raise funds at a lower valuation only to stay afloat – Byju’s, Pharmeasy and Udaan being the top names to watch out for.

  4. Profitability – At least 2 Unicorns will turn profitable – MPL, Zetwerk and Moglix being the top names to watch out for.

  5. Consolidation in Quick Commerce space, Dunzo and Zepto being the most likely target.


World's 2023 Unicorn Story in Numbers


You can access the print version of this Newsletter here:


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