Coveted unicorns list decline in 2023, indicates slowdown in funding: Hurun report

There are 147 startups in India that have the potential to become unicorns in the next 5 years. This is as per the ASK Private Wealth Hurun India Future Unicorn Index.

Out of about 122 startups in India that Hurun listed as likely to enter the country's unicorn club last year, it has dropped about 19 of them this year. However, 48 new additions have been made as well.

This comes at a time when the startup ecosystem is experiencing a funding winter and rising cases of corporate governance lapses.

Currently, there are 83 unicorns in India, 51 gazelles and 96 cheetahs as per the index. This compares to 84 unicorns, 51 gazelles and 71 cheetahs last year.

Hurun Research Institute defines unicorns as startups that are founded after 2000, with a valuation of $1 billion, gazelles as startups that are most likely to become unicorns in the next three years, and cheetahs as startups that could become unicorns in the next five years.

ASK Private Wealth's chief executive and managing director Rajesh Saluja said unsustainable business models adopted by startups have led to a dip in valuations but stressed that funding to the right companies continues.

“The slowdown in the economy has been tough for certain companies, with almost 20 percent of last year’s gazelles and cheetahs either dropping off the list or being downgraded. Hurun Research believes these companies could no longer become unicorns within three years. Rising interest rates and geopolitical headwinds have combined to make it harder for startups to raise capital,” says Anas Rahman Junaid, Hurun India founder and chief researcher.

Junaid, however, said that the Indian startup story has high potential and he sees the overall number of unicorns in India touching 200 in the next five years.

Saluja said recent troubles on the governance front in some startups like Byjus will not impact funding to the broader Indian startup ecosystem and pointed to high interest among high networth individuals to invest in funds, which will be deployed in startups.