E-commerce startups operating in the business-to-consumer (B2C) space win the race to churn the quickest unicorns, while those in the online gaming and software-as-a-service (SaaS) sector take almost a decade to hit the $1 billion valuation mark, says a new report.
A unicorn is a privately-held startup with a valuation of $1 billion or more.
“Historically, the average time taken by an Indian startup to become a unicorn has been nearly seven years,” according to PwC’s CY22 Start-up Perspectives report.
The findings point out that on an average e-commerce B2C firms take about 3.8 years to turn unicorn, followed by logistics and autotech startups which take nearly 6.3 years, and media and entertainment startups that take 6.8 years.
However, the SaaS industry currently has about 20 active unicorns, the largest number among all sectors studied in the report, followed by fintech, which currently has about 16 active unicorns.
The report noted that across sectors, 21 startups entered the unicorn club in calendar year (CY) 2022, compared to 42 in CY2021, amid a broader funding slowdown in the ecosystem.
Becoming the most funded sector during the year, SaaS startups contributed about 25% to the total funding activity in India, seeing an overall jump of over 20% year-on year (YoY) in funding value to about $6 billion, as average ticket sizes in the sector grew to $18 million from $15 million in CY21.
Following this, fintech firms commanded over 20% of the total funds raised in the given period amid a 40% YoY decline in investment activity in the sector. Only four firms, however, attained unicorn valuations, including OneCard, Yubi, among others.
"The steepest decline in funding during CY22 was witnessed in e-commerce business to consumer (B2C) at 71% and edtech at 54%," the report said.
Amid a steep decline in edtech funding, edtech major Byju’s raised the most funds at $915 million, followed by upGrad, which raised $225 million.
The slowdown in funding had an impact on late-stage deals, the report noted. “A decline of 52% in funding of late-stage deals was also witnessed in CY22,” it said.
In 2022, growth and late-stage deals comprised $20.8 billion, or roughly 88% of the total funding value of $23.6 billion. However, in 2021, growth and late-stage deals represented nearly 93% of the total funding value of $35.2 billion, it showed.
Despite an overall dip in funding activity during the year, the Startup Perspectives report showed that overall investment in 2022 was more than twice the funds raised in CY20, when startups cumulatively secured about $10.9 billion in funding.
In terms of the cities which saw maximum investment activity, both in terms of value and volumes, Bengaluru retained its position as the city seeing maximum fundraises cumulatively valued over $100 million, followed by Delhi-National Capital Region and Mumbai.
