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The combined valuation of 35 Indian unicorns stands at $116 Bn, but the majority of them have negative unit economics. On average, it takes seven years for an Indian startup to achieve $1 Bn-plus valuation from the time of inception. Perhaps nothing indicates the success of India’s startup ecosystem more than the rising number of unicorns in the past couple of years. While India is still way behind China and the US in terms of companies with $1 Bn-plus valuation, the country has outpaced other developing economies such as Germany, UK, South Korea, and Japan in this regard.

The success of a startup ecosystem is typically measured through the annual growth key macro indicators such as the total capital inflow, the number of startups funded, deal flow, investor participation. But recently, another metric has come into the public debate i.e the count of unicorn startups with $1 Bn-plus valuations. The rise of unicorns is a testament of a startup’s ecosystem ability and propensity to sustain a high growth streak of startups. A positive correlation between the development of a startup ecosystem and the number of unicorns can be inferred from the state of the two most prominent startup ecosystems in the world — the United States and China have 228 and 122 unicorn startups and both are also the two biggest startup markets in the world in that order. On the third spot is India which has over 55K startups out of which 35 managed to enter the unicorn club (few dropped out as well). India has outpaced more developed economies and emerging startup ecosystems such as the UK (25), Germany (13), and South Korea (10).In the post-pandemic era, higher valuations are no longer an indication of the success of a startup, especially a unicorn. When looking beyond the glorified valuations of the majority of unicorns in India and at their bare financial metrics, a very different picture emerges. As per an Inc42 Plus analysis, based on a sample set of 30 out of the 35 unicorns, a mere 30% or nine unicorns are EBITDA-positive i.e with profitable unit economics. The fact that unicorn startups are some of the biggest employers in the Indian market, a fall from grace or drop in valuation and business downturn can be very catastrophic — not just in terms of squandered VC money but also in job losses, as has been evident during the Covid-19 pandemic.