India, which is home to 83 unicorns currently, witnessed a sharp decline in the current year, indicating a slowdown in the Indian startup ecosystem, according to the ASK Private Wealth Hurun India Future Unicorn Index 2023.

From 2021, 24 companies leaped to the unicorn club in 2022. In 2023, so far, however, only 3 companies have reached a valuation of $1 billion (or Unicorn), signifying a slump in the startup industry.

The overall figure of unicorns also reduced to 83 in 2023 as against 84 in the previous year.

The index is a ranking of India's startups founded in the 2000s, worth at least $200 million, not yet listed on a public exchange and most likely to 'go unicorn' within three years (gazelles) or five years (cheetahs). The cut-off date was May 31, 2023.

India presently has 83 unicorns, 51 gazelles, and 96 cheetahs, compared to 84 unicorns, 51 gazelles, and 71 cheetahs in the 2022 index, as per the report. The number of gazelles remains constant in both years' reports.

The report mentions electric scooter maker Ather Energy, quick commerce firm Zepto, and edtech company Leap Scholar which stand among the ventures that have the potential to become unicorns. Online furniture seller platform, Pepperfry, is assessed to be the most valuable cheetah.

With many startups failing to reach the height of unicorns, eight gazelles have been demoted to cheetahs and another 19 have been dropped out of the index altogether.

Private Wealth Hurun India Future Unicorn Index 2023 features startups only with a minimum valuation of $200 million (₹1,650 crore). In spite of funding constraints, Hurun Research found 147 Indian future unicorns from 25 cities. On average, they were founded in 2015, with the vast majority selling software and services, with only 20% selling physical products. 37% are selling to businesses, while 63% are consumer-facing. Future unicorns were seen upending the fields of financial services, healthcare, business management solutions and education.

"The slow-down in the economy has been tough for certain companies, with almost 20 percent of last year's gazelles/cheetahs either dropping off the list or being downgraded. Hurun Research believes these companies could no longer go unicorn within three years. Rising interest rates and geopolitical headwinds have combined to make it harder for startups to raise capital," says Anas Rahman Junaid, Hurun India founder and chief researcher.

Despite the slowdown, India's future unicorns are currently worth $57 billion, with a jump of 16% as against last year. The rise in percentage is largely attributed to the addition of new future unicorns to the list, says the report.

"While rising interest rates and global uncertainties have dramatically reduced the appetite of investors to put money into startups in the past half year, there are nonetheless 147 companies, a new record, that Hurun Research believes are most likely to 'go unicorn' within five years," adds Junaid.

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