Indian unicorn, wild growth

  Unicorn companies are often regarded as the bellwether of “economic vitality”.
  ”The establishment time is less than ten years, and the valuation is greater than 1 billion US dollars.” Behind these two conditions is a rare and vigorous potential, and no investor does not like such high growth. And the country with the most “unicorns” in the past two years is India.
  Throughout 2021, India has produced 44 unicorns. In the first half of 2022, 20 more unicorn companies have emerged in India.
  What is more worth mentioning is that the total number of unicorn companies in India has reached 105, including the US$100 million Series A financing obtained by the blockchain company 5ire from the British company SRAM & MRAM in July. This figure comes three years earlier than the 2025 forecast by Ghosh, chairman of the Indian Software Industry Association.
  At a time when the growth rate of Chinese unicorn companies has plummeted, India’s performance is impressive. In fact, India has become the third largest start-up ecosystem in the world after the US and China, and there is a trend of closing in on China.
  We can’t help but wonder, what is the reason for India’s rapid rise to such a hot nuggets paradise?
A hundred flowers bloom

  If you look closely at the new unicorn companies in India, you will find that they are in different industries, and there is a taste of “the best in the world”.
  Take the 20 new “unicorns” in 2022, there are e-commerce companies with “broad market potential”, such as DealShare and ElasticRun; there are financial technology companies with “fast money”, such as CredAvenue, Oxyzo, Open and OneCard; there are blockchain technologies that do “transaction revolution”, such as Polygon and 5ire.
  There are hard technologies such as artificial intelligence and image development, such as Uniphore, Hasura and LeadSquared, and home improvement, beauty, and games that are closely related to life, such as Livspace, Purplle and Games 24×7.
  From business to finance, from technology to life, India’s “unicorns” are not lame or partial, but emerge in many industries, showing a state of blooming flowers. This shows that this wave of unicorn financing is not a bubble overflow in a small circle, but is happening in all walks of life in India.
  This is easily reminiscent of a saying that prevailed in the Chinese Internet business circle a few years ago – any industry is worth doing again with the Internet.
  At that time, China’s Internet upstarts were willing to use digital to reconstruct traditional industries, and a large number of industry names were added with the word “new”. Innovative species such as new retail, new logistics, new manufacturing, new services, new media, and new finance are springing up like mushrooms after a rain. At this time, India seems to be walking on the road of China.
  There is no doubt that rapid population growth and a vast market are one of India’s greatest strengths. With such a huge market capacity and demographic dividend, Indian companies should live well and easily grow into giants. But in fact, before 2020, the number of “unicorns” in India is not much.
  In the decade 2011-2020, the total number of unicorns produced in India was only 37, not reaching the number in 2021 alone.
  The reason is due to the late popularity of smartphones in India. As the entrance of the emerging Internet economy, without the basic equipment of the smartphone, the entrepreneurial base does not exist.
  According to a 2016 report by the Pew Research Center, smartphone penetration was 72 percent in the U.S. at the time, 58 percent in China and 17 percent in India. This reason also directly led to the entrepreneurial trend in India later than the United States and China.
In order to encourage entrepreneurship, the Indian government also announced that start-up companies are exempt from paying taxes and exempt from labor laws for the first 3 years after their establishment. At the same time, procedures such as business registration and patent application have also been greatly simplified.

  But just like the “flying geese theory” in which capital will continue to look for depressions, the gradual saturation of other markets has brought capital to India, where labor costs are lower and the market is still very broad. Since 2015, Samsung, Xiaomi, OPPO, vivo and other manufacturers have begun to seize the Indian smartphone market.
  As the price of smartphones continues to drop, more and more Indians are using smartphones, especially young Indians.
  More than half of India’s population is under the age of 25, the largest group of young people in any country. When this generation combines with smartphones, the door to India’s internet market has finally been knocked on.
put youth to work

  Getting people to eat, eat well, and eat well is a thorny issue faced by all developing countries. This is especially critical for India, which has a huge population base.
  More than 600 million young people are a much-needed labor force and consumption power for ordinary countries. But what is different in India is that a large number of working-age people in the country are not willing to go out to work.
  According to 2022 data from the Indian Economic Monitoring Center, 450 million of India’s 900 million people of legal working age are unwilling to actively seek work, especially graduates and women.
  Why does this happen? The situation of graduates and women should be explained separately.
  The case of graduates is because India has fewer businesses and fewer quality businesses. Graduates acquire skills but struggle to find jobs that match their education levels. Young people in the Internet age are generally reluctant to do physical work. If they continue to find jobs, they will have no choice but to “lie down”.
  The situation of women is related to Indian social attitudes. Indian traditions and family responsibilities make it difficult for women to find time to work, and the workplace is not friendly to women, so Indian women simply stay at home.
  The demographic dividend does not always exist. With the aging of the population, the country will face huge social support pressure. The Indian government also knows that this fleeting window of demographic opportunity must be seized.
  To get more young people to go out to work, in 2016, the Modi government launched a program in New Delhi called Startup India. At that time, the Indian government said that it would set up a fund totaling 100 billion rupees in the next four years to support entrepreneurial projects in the fields of manufacturing, agriculture, health and education; at the same time, the government would also set up a credit guarantee mechanism to assist Startups receive credit from financial institutions.
  In order to encourage entrepreneurship, the Indian government also announced that start-up companies are exempt from paying taxes and exempt from labor laws for the first 3 years after their establishment. At the same time, procedures such as business registration and patent application have also been greatly simplified. Entrepreneurial enterprises can complete the enterprise registration in one day through the mobile phone APP; the time for patent application approval is shortened, and the cost is reduced by 80%.

  The continuous popularity of smartphones and the relaxed entrepreneurial environment have ignited the entrepreneurial desire of young Indians in the Internet field. From 2015 to 2021, the Indian startup ecosystem has grown exponentially: the number of investors has increased by 9 times, the total funding of startups has increased by 7 times, and the number of incubators has increased by 7 times.
  Some media wrote: “Now walking into Starbucks in the three major cities of Bangalore, New Delhi, and Mumbai, you will find that half of the chat is related to entrepreneurship, recruitment, and financing, although cafes with incubator functions are rare in India.”
  In the past, the outflow of outstanding engineers and programmers from India was serious, and Silicon Valley was the favorite place for elites to go. However, in recent years, the local Internet market in India has developed rapidly, and there is an urgent need for excellent programmers. Just like in the first few years of China’s Internet development, the “programmer bonus” made the salary of technicians much higher than the average level, the current situation of extreme shortage in the Indian market has also caused the salary of programmers to increase exponentially, and local companies have to offer more. High salaries attract the return of overseas talents.
  Bangalore is India’s “Silicon Valley”, the city with the highest concentration of programmers in India, and the startup capital of India. Entrepreneurs can find talent and capital relatively easily here, due to the high concentration of technical personnel and the large number of financing institutions.
  New Delhi and Mumbai are also places with more “unicorns”. Except for the first-tier cities, the entrepreneurial wave has a tendency to spread to the whole country of India.
Chinese capital fades out

  Because of their “star effect”, unicorn companies have always been highly valued. If they can participate in investment relatively early before their listing, investment institutions are likely to get a good share of the pie and reap huge returns.
  Iron Pillar, a local Indian venture capital institution, predicts that by 2025, India will have more than 250 unicorn companies, which means that there may be about 150 “unicorns” born in India in three years. For investors who hold large sums of money but suffer from no good “investment targets”, India has obviously become a gold rush that needs to be focused on.
  The Passage, which has established an overseas office in Bangalore, is one of the few Indian industrial research institutions in China, and has become an important channel for Chinese overseas Chinese to understand the Indian Internet industry and connect with local resources.
  Hu Jianlong, CEO of The Passage, shared his views on the explosive growth of unicorn companies in India in recent years.
During the “unicorn” boom in India in the past two years, Chinese capital has been relatively low-key. Active investors are mainly Tiger Global Fund, SoftBank, Sequoia India, GGV, Accel, as well as Google and Amazon.

  ”In addition to the improvement of India’s own investment environment and the opportunity of the local Internet industry, the surge in unicorns is also related to the search for new exports by global capital.” Hu Jianlong believes that due to the impact of epidemic control, funds invested in China in the past Start looking for new economic growth points, and India, which has a population size of its size, is a good choice. “Outside of India, the financing scale of Southeast Asia, other regions of South Asia, and the Middle East has increased significantly compared with the past.”
  The outbreak of the new crown epidemic in India in 2020 and the continuous advancement of digital technology have become the explosive growth of Indian unicorn companies in 2021. key reason. They are spread across “fintech”, food, education, media, blockchain technology, and more.
  Hu Jianlong said that India is very complex and is very different from China, the United States and other countries. For example, the situation of Indian e-commerce is not particularly good, but it also has its own way of playing in the field of e-commerce. Investors may miss out on a lot of opportunities without an in-depth look at India’s own social conditions and business structure.
  In the past, China, the United States, and Japan have all participated in the investment in India. According to the statistics of Gateway House, an Indian think tank, by 2020, two-thirds of Indian unicorns were backed by Chinese capital; more than 50% of app downloads in India came from companies invested by Chinese funds.
  Consistent with the global venture capital trend, among the existing unicorn companies in India, the fintech sector is the largest, accounting for 25%, followed by education technology, consumer technology and supply chain sectors that are driven by the pandemic. The proportion is also relatively high.
  However, after 2020, due to the friction between China and India on the border issue, and India’s intensified supervision and investigation of Chinese companies, China’s investment in India has declined, and news of Chinese capital’s withdrawal from the Indian market has been heard endlessly.
  During the “unicorn” boom in India in the past two years, Chinese capital has been relatively low-key. Active investors are mainly Tiger Global Fund, SoftBank, Sequoia India, GGV, Accel, Google, Amazon, etc. Tencent is occasionally seen.
  Hu Jianlong believes that due to geopolitical influence, Chinese investment in India has been politicized. After several rounds of suppression, even if Chinese capital recognizes India’s potential, it is difficult to make large-scale investments.
  Regarding India’s excellent performance in the field of “unicorns”, there is no shortage of comments in the public opinion field that “China is about to be surpassed by India”. But in Hu Jianlong’s view, it may take a long time for India to catch up with China.
  ”India’s fixed network infrastructure is not good, electricity is in short supply, and the quality of the average population needs to be improved. These factors still restrict India’s high-level development. By comparison, India is still far from China, and it will take a long time to catch up.”