Global Unicorn Index 2024

Why in the news?

The ‘Global Unicorn Index 2024’ released by research group Hurun.

Key-findings of the report

• In 2023, India had 67 unicorn startups (68 in 2022) and placed third globally. E.g., Delhivery, Nykaa etc. 
  • USA led with 703 unicorns, followed by China with 340.
  • The US has 50% of the world’s known unicorns followed by China (25%) and Rest of the World (25%).
• Founders from India produced more offshore unicorns than any other country, co-founding 109 unicorns outside of India compared with 67 in India. 
• A unicorn startup is a privately held company, without any listing on public exchanges, valued at $1 billion or more and supported with venture capital.
  • Gazelles: Start-ups most likely to ‘go unicorn’ within 3 years.
  • Cheetahs: Start-ups most likely to ‘go unicorn’ within 5 years.

Factors behind decline of Unicorn in India

• Sustainability of the models: High cash burn rates and heavy discounts to attract customers have eroded profitability and raised concerns about the long-term viability of these companies.
• Overvalued startups: Several Indian startups were too richly valued and could not justify their valuations.
  • Paytm's stock has gone down by 80 per cent since its 2021 listing.
• Slowdown in funding: Funding to Indian startups declined significantly in 2023 compared to last year.

Measures to be taken

• Sustainable business models: Unicorns will need to prioritize profitability over rapid expansion, invest in technology and innovation, and diversify their revenue streams.
• Fair Valuation: There is a need for better regulation of valuation.
• Regulatory environment: Simplification and rationalization of legal and compliance requirements can provide stability and confidence to the Unicorns in future.