B2C e-commerce startups fastest to achieve unicorn status, says PwC India report

BENGALURU: E-commerce firms operating in the business-to-consumer (B2C) space are the quickest to churn out unicorns, while those in the online gaming and software-as-a-service (SaaS) industry take almost a decade to touch the $1 billion valuation mark, according to PwC’s CY22 Start-up Perspectives report.

“Historically, the average time taken by an Indian startup to become a unicorn has been nearly seven years,” the report said.

The report’s findings show that e-commerce B2C firms, on an average, take about 3.8 years to attain unicorn status, followed by logistics and autotech startups which take about 6.3 years, and media and entertainment startups that take an average of 6.8 years to achieve $1 billion valuation.

The SaaS industry currently has about 20 active unicorns, the largest number among all sectors, according to the report, followed by fintech, which currently has about 16 active unicorns.

The report noted that across sectors, 21 startups entered the unicorn club in calendar year (CY) 2022, compared to 42 in 2021, amid a broader funding slowdown in the ecosystem.

Becoming the most funded sector during the year, SaaS startups made up for about 25% of total funding activity in India, seeing a jump of over 20% year-on year (YoY) in funding value to about $6 billion, as average ticket sizes in the sector grew to $18 million from $15 million in CY21.

Following this, fintech firms commanded over 20% of total funds raised in the given period amid a 40% YoY decline in investment activity in the sector. Only four firms, however, attained unicorn valuations, including OneCard, and Yubi.

“The steepest decline in funding during CY22 was witnessed in e-commerce business to consumer (B2C) at 71% and edtech at 54%,” the report said.

Amid a steep decline in edtech funding, edtech major Byju’s raised the most funds at $915 million, followed by upGrad, which raised $225 million.

The slowdown in funding was striking across late-stage deals, the report noted. “A decline of 52% in funding of late-stage deals was also witnessed in CY22,” it said.

In 2022, growth and late-stage deals comprised $20.8 billion, or roughly 88% of the total funding value of $23.6 billion, however, in 2021, growth and late-stage deals represented nearly 93% of the total funding value of $35.2 billion, it showed.

Despite a dip in funding activity during the year, the Startup Perspectives report showed that overall investment in 2022 was more than twice the funds raised in CY20, when startups cumulatively secured about $10.9 billion in funding.

Bengaluru retained its position as the city seeing maximum fundraises cumulatively valued over $100 million, followed by Delhi-National Capital Region and Mumbai.