GS Paper - 3 (Economy)

The Prime Minister praised India’s startup ecosystem as he highlighted that the country has reached a landmark figure of 100 unicorns with a valuation of more than $300 billion.

What is a unicorn startup?

  1. Unicorns are privately held, venture-capital backed startups that have reached a value of $1 billion.
  2. The valuation of unicorns is not expressly linked to their current financial performance, but largely based on their growth potential as perceived by investors and venture capitalists who have taken part in various funding rounds.
  3. American venture capitalist Aileen Lee is credited with coining the term in 2013.
  4. From the time the term was first used, it has become more common for startups to bag the unicorn tag, but the $1 billion valuation still gets industry attention, and is considered an impressive achievement.
  5. According to Invest India, the government’s National Investment Promotion and Facilitation Agency, “The year 2021, 2020, and 2019 saw the birth of the maximum number of Indian unicorns with 44, 11, and 7 unicorns coming each year, respectively.”
  6. It adds that between 2015 and 2021, the country’s startup ecosystem has seen a nine-time increase in the number of investors, and a seven-time increase in the total funding of startups.