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India’s three most profitable unicorns are promoter-owned

Zoho alone accounted for more than half of the combined profit of the three unicorns

May 10, 2022 / 10:17 AM IST

India’s three most profitable unicorns – startups valued at over $1 billion – have no venture capital or private equity investors and are entirely owned by promoters or promoter groups, according to data compiled by Moneycontrol.

Zoho Corporation, one of the country’s oldest software-as-a-service (SaaS) platforms, online stock broking platform Zerodha, and data analytics firm MuSigma are the most profitable unicorns in India, according to the data.

Zoho and Zerodha are bootstrapped, never having raised any funding to date. MuSigma had the backing of venture capital firms Sequoia Capital and General Atlantic before founder Dhiraj Rajaram bought back their shares.

The three unicorns recorded a combined net profit of over $500 million for 2020-21. Zoho led with earnings of almost $254 million, followed by Zerodha with $238 million and MuSigma with $60 million, according to the data compiled by Moneycontrol through people with knowledge of the numbers.

The remaining 20 profitable private equity and venture capital-backed unicorns had a combined net profit of just over $300 million, the data showed.


Bootstrapped unicorns tend to be profitable since inception because their primary goal is to make profit as their promoters’ money is at stake, AK Prabhakar, head of research at IDBI Capital, told Moneycontrol.

PE/VC-backed startups tend to burn cash while looking to acquire customers by spending more aggressively as they have the backing of billions of dollars from these investors, Prabhakar added.

The data is of significance and comes as a few private equity and venture capital firms seek partial or full exits from unicorns including Pharmeasy, Oyo, and Snapdeal through initial public offerings. These unicorns have delayed their listing plans amid volatile market conditions and after looking at the responses to new-age technology unicorns that listed last year.

Analysts and researchers said the hammering of shares of companies including Paytm, Policybazaar, Zomato and Nykaa will weigh on the minds of retail investors, which will affect public listings of new-age technology companies.

Moneycontrol reported last week that only 23 of India’s 100 unicorns have managed to achieve company-level profitability for a financial year to date after raising billions of dollars from private equity and venture capital investors at high valuations.

Of the 23 unicorns, five operated various SaaS platforms, while four were into credit or lending marketplaces. Private investors told Moneycontrol that SaaS platforms tend to have higher operating margins, followed by lending and credit marketplaces.
Nikhil Patwardhan
first published: May 10, 2022 10:17 am
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