Home / Companies / Start-ups /  ‘Dragon’ the next start-up benchmark?

Mumbai: It is no longer enough to be a ‘unicorn’ in the start-up universe. The latest moniker that firms aspire for is ‘dragon’.

While a ‘unicorn’ denotes an unlisted company that has achieved a valuation of over $1 billion based on funds raised, a ‘dragon’ is one that raises $1 billion from investors in a single round.

India already has its first dragon—Bengaluru-based Flipkart. The company raised $1 billion in a round co-led by Tiger Global Management, Naspers and Government of Singapore Investment Corp. Pte Ltd (GIC), among others, in July 2014.

Globally, including Flipkart, six companies have so far made it to the dragon club as of October, according to data compiled by New York-based research firm CB Insights. The other dragons in the club include taxi aggregators Uber and Didi Kuaidi and budget stay aggregator Airbnb. The number has grown from just two dragons last year.

What’s most interesting about these so-called dragons is the pace at which these companies have raised capital to make it to the so-called dragon club. For instance, when Flipkart raised $1 billion in July 2014, it was a 376% jump from what it raised in its previous round just two months earlier. Similarly, when Chinese taxi aggregator Didi Kuaidi raised $2 billion in July, it was 233% more than the investment it raised six months ago. In the case of San Francisco-based Airbnb that raised $1.5 billion in June this year, the 215% jump in funds came after a year and two months.

“It’s a handful of companies today that can make it to this list... it will happen wherever a clear category leader is established," said Tarun Davda, a director with Matrix partners, a venture capital fund that has invested in Indian unicorns like taxi aggregator Ola and online classifieds start-up Quikr.

There are several Indian start-ups that could fire their way into the global dragon club soon. These include mobile payments platform Paytm, owned by Delhi based One97 Communications Ltd; Delhi-based e-commerce marketplace Snapdeal, owned by Jasper Infotech Pvt. Ltd; and Ola, owned by ANI Technologies Pvt. Ltd. Paytm and Snapdeal have recently raised $500 million rounds, while Ola is in the process of completing a $500-600 million round, of which it has already raised $225 million.

CB Insights, in a report published in association with the New York Times in August this year, estimated that by financial year 2019-20, India will be home to 50 unicorns. The report refers to Gurgaon-based Locodel Solutions Pvt. Ltd, owner of hyperlocal delivery service Grofers, and budget stay aggregator Oravel Stays Pvt. Ltd, or OYO Rooms, as future unicorns.

On the subject of dragons, Davda adds a note of caution: large rounds that were closed in a matter of weeks are now taking a few months to fructify. Also, funds that were excited by the short-term momentum of the market have stepped back. So it will be large, late-stage private equity funds that will dominate for the near future.

Others are more optimistic.

“I think good businesses will be able to raise money in any environment," said Albinder Dhindsa, co-founder of Grofers.

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