2022 Year in Review | Is the Unicorn party Over?

 

2022 Year in Review | Is the Unicorn party Over?

What went wrong in 2022 and What Does 2023 hold for Startups.

The Unicorn Count.

After a record 44 Indian startups turned unicorns in 2021 the unicorn rally got slowdown in 2022 with only 21 startups turning into unicorns approximately 50% down in terms of both number and funding, In 2022 the Indian startup ecosystem raised only $24 Bn till November as against $42 Bn raised in the entire 2021, The total stays at 108 unicorns.

But the good news, as the year draws to an end, is that a larger number of startups with female founders-led turned unicorns this year compared to 2021. Seven startups founded by eight female founders turned unicorns in 2022 as against six such startups in 2021. 5Fire, LivSpace, Lead, Hasura, Amagi, Open, and Oxyzo were the seven startups with female founders to enter the unicorn club in 2022.

 

Positive outlook for Fintech

In 2021, fintech and e-commerce produced the highest number of unicorns (11 each). Together, they produced 52% of the total unicorns in the year. However, the tables turned in 2022 as the fintech sector came under the regulatory gaze of the Reserve Bank of India, while the cash-guzzling e-commerce sector saw many startups shutting down verticals to cut expenses.

In 2022 Credit distribution saw enormous growth as fintech made it easy and quick, For 2023 the outlook for new financial products looks good, People are getting addicted to credit products like buy now pay later and easy EMI, in the same row ONE card turned into unicorn this year only.

Apart from the credit and loan market digital insurance and stock brokers also witnessed a good year even though the domestic and International markets remains flat this year, Groww the Stock Broking app which started offering equity services in early 2020 increased its market share to 10.68% making it 3rd largest stock broker of the country, India's largest stock broker Zerodha the wholly bootstrapped startup also clocked a total revenue worth INR 2,729.6 Cr in FY21, against expenses of INR 1,260.1 Cr during the same time.

In a developing country like ours where even today many villages and remote locations lack financial services these Fintech companies can penetrate deep into these parts and everyone can access basic banking services, currently, most of the fintech services are focussing on building products for small businesses, merchants, students, foreign travel and normal Indian salaried class people there's a huge space remain for building financial products in agriculture and rural banking.

The Listing Story

In 2021 many startups like Zomato, Paytm, PolicyBazar & Nayka got listed in exchanges all reported very poor performance in 2022.

Shares of Paytm which had pulled off the country’s largest-ever IPO last year — have lost 75% of their market value in the first year of listing, becoming the worst first-year share plunge among large IPOs in 10 years. Those who bought shares of Zomato and Nykaa at the time of their listing have also seen significant wealth erosion.

Despite these poor performances many of their piers have to launch their IPO in 2023 as many Indian unicorns are stuck in the turmoil, Raising money in the private market is no more easier than it was in 2021 and eventually, many startups like Oyo, Snapdeal, Byju’s, and MobiKwik have to get listed even despite saturated market but this time getting subscribed by the investors will get difficult after whatever investors have gone through the post listing of recent tech startups.

  ~Aditya Gupta for Catalyst E-Cell.