India Adds Its 100th Unicorn

By Siri Ratnam

San Jose, California

Founders of the neobank Open: Anish Achuthan, Mabel Chacko, and Ajeesh Achuthan. (Selvaprakash Lakshmanan / Forbes India)

In the first week of May 2022, the Neobank Open was declared a Unicorn after receiving $50 million in funding and investments from IIFL, a financial services company, bringing India’s total Unicorn count to 100. Open’s minting as a Unicorn is just the latest in a series of the exponential rate at which India is producing Unicorns, but it also marks India’s rapid development as the nation progresses towards becoming a global startup hub.


A Unicorn is a term used to describe a startup that has reached or exceeded a $1 billion valuation. In 2021, India declared 44 companies as Unicorns, a significant increase from the 37 that were minted in the last ten years combined, creating 1.4 million new jobs and generating $106 billion in revenue. But, the pace at which India continues to do so is only growing, with Open becoming India’s 14th Unicorn in the first four months of 2022 alone. Officially, according to the Indian Ministry of Commerce and Industry, with the addition of Open, one in ten Unicorns globally are in India. The country can attribute part of its Unicorn boom to the pandemic, with consumers working from home and flocking to online businesses for basic needs, greatly impacting the world of online retail. In addition to that, the Chinese government pressuring Chinese tech companies resulted in investors looking toward Indian startups.


Aside from Unicorns though, with over 62,000 startups, India has overtaken the UK and is now the third-largest startup ecosystem in the world, behind only the US and China. Though Delhi recently became India’s startup capital, overtaking Bangalore with over 5000 startups in 2021, Bangalore is still a close second with around 4500. But Bangalore is also home to the vast majority of Unicorns in India, with around 42% of the country’s roster being from the state of Karnataka, including Open. Bangalore also brought in almost half of India’s Foreign Direct Investment (FDI) in the 2021-22 fiscal year.


Piyush Goyal, the Commerce and Industry Minister, said “the startup bug has caught India’s imagination. The entire innovation ecosystem that the startup industry represents is giving a new direction, new momentum to India.” The statement describes the Indian government’s role in paving the way for India to be at the forefront of the global startup industry. Signed in February but being put into effect in the past week, the UAE-India Comprehensive Economic Partnership Agreement (CEPA) is designed to increase bilateral trade between the UAE and India while opening up investment opportunities for both nations. It serves as just one of many intergovernmental agreements that India has signed in hopes of growing its startup ecosystem. The Delhi Government also announced on May 6th the Delhi Startup Policy, which aims to present the city as a center for global innovation by supporting 15,000 startups by 2030. Starting at the collegiate level, the policy will introduce more entrepreneurship classes and support students working on business ideas through, for example, allowing them to seek one to two years off to work on their plans. Financial incentives revolve mainly around reimbursements.


That being said, there are still several hurdles that Indian startups, particularly in tech, face, such as the declining popularity of engineering as a career. The number of students graduating with degrees in engineering dropped from 2.9 million in 2020 to 2.2 million in 2021, a direct result of fewer seats at engineering schools and curriculums that are not updated. This was a 10 year all-time low in the number of engineers graduating, though it is important to note that India still produces significant numbers of engineers. Another concern stems from the possibility that the valuations of these Unicorns are not accurate reflections of the market due to only a few of these companies being M&A (when two companies combine to form a financially stronger company). Several lawsuits involving the investors of these startups also pose another significant obstacle for Unicorns in India.


Despite these challenges, current trends indicate that India’s exponential growth towards becoming a leading global center for startups remains promising.