Hurun demotes eight ‘Gazelles’ to ‘Cheetahs’; drops 19 startups from unicorn index

Rajesh Saluja, CEO & MD, ASK Private Wealth and Anas Rahman Junaid, MD & Chief Researcher, Hurun India

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

This year's ASK Private Wealth Hurun India Future Unicorn Index features approximately 147 startups that have the potential to become unicorns in the next five years, with an additional 48 new ones added to the list.

Also Read: Hurun finds 51 ‘gazelles’ and 71 ‘cheetahs’ in Indian startup ecosystem

Moneycontrol previously reported that India, the world's third-largest unicorn ecosystem, has not seen a new unicorn in the past nine months. This marks the longest drought in seven years, indicating a decline in the unicorn frenzy as the much-talked-about funding winter tightens its grip on valuations of technology startups globally.

“When there's an environment where general liquidity is tight, then you want to max out, you want to get your best bets. So you're pushing promoters for lower valuations, you want to get the best deal. That's the reason that you can call this a funding winter where investors trying to get a better deal and hence, they wait or put pressure on the business, because most of these startups are not profitable and need the funding to keep going,” Rajesh Saluja, CEO and MD, ASK Private Wealth told Moneycontrol.

Hurun added that there are 51 ‘gazelles’, or startups that are likely to become a unicorn in the next three years, and 96 ‘cheetahs’, or those that could achieve the milestone in the next five years. A unicorn is a company valued at $1 billion.

This year, about eight startups were also demoted from gazelles to cheetahs.

Highlights from ASK X Hurun Unicorn Index 2023

“The demotion of startups is purely based on feedback from the investor ecosystem, venture capitalists and angel investors. In our initial list based on our research, we weed out startups that are plagued by governance issues and other apparent drawbacks,” Anas Rahman Junaid, MD & Chief Researcher, Hurun India told Moneycontrol, during an interaction at the press conference in Mumbai.

The evaluation is based on regulatory filings, feedback from other entrepreneurs, and some of the active India-focused VC funds and angel investors as of May 2023, Hurun said.

Quick commerce company Zepto and electric vehicle maker Ather Energy retained their positions as top contenders for the unicorn club. Other mentions include mobility startup Rapido, edtech startup Leap Scholar, agritech company Ninjacart, and artificial intelligence startup Observe.AI, among others.

Top 10 startups to become unicorns in the next three years

Top 10 startups to become unicorns in the next five years

Meanwhile, Zomato-backed logistics startup Shiprocket, fintech startup OneCard, and wearables brand BoAt, which were among the top startups expected to become unicorns last year, have joined the coveted club, according to the report.

This also comes at a time when funding to Indian startups plunged to about a fifth in the first five months of 2023, compared to the same period last year.

ASK's Saluja mentioned that he expects interest rates to come down next year, which is bound to attract more investments to India.

“Interest rate cycles are peaking, there will be some rate hikes, but you're seeing a trend. I believe that by next year, we will look at interest rates coming down. That will lead to institutions looking at chasing growth again which typically would mean more investment,” said Saluja.

India’s future unicorns are currently worth $57 billion with an increase of 16 percent as compared to last year, mainly driven by addition of new startups to the list.

About 18 of the 147 startups on the list are led by women co-founders. Hurun said that women entrepreneurs are at the helm of six companies that could enter the unicorn club in the next three years and 12 startups that could do so in the next five.