New Delhi. Startups are progressing a lot due to the country’s strong economy and foreign investment. Due to this, now they are rapidly turning into unicorns i.e. companies with a valuation of more than one billion dollars. Not only this, startups like Byju’s have become Decacorn. Due to this, plenty of job opportunities are being created in them.
Almost daily this week of April, a new unicorn has registered its name. According to venture capital investors and experts, the number of such units in India will increase to 150 by the year 2025. According to startup industry sources, the first 50 startup units in Unicorn’s list will be added in a year or two. There is also no dearth of funds to pursue such units.
Startups are doing growth due to getting money from PE
A report by Credit Suisse said that continuous inflows from private equity companies have helped a lot in dealing with the capital crunch in India. For Indian companies, increasing inflow of funds into private equity companies is one of the main reasons for the increase in the number of startup units. PEs are participating in such a big way that the number of money raised in the private market has exceeded the number of transactions in the public market in every last year of the last decade.
At present, PE companies in Asia have $361 billion
According to Prakin data, about 35 private equity companies focused on India are looking to raise $8 billion and about 80 venture capital companies are planning to raise a combined $8.3 billion. The story does not end here. According to Prakin’s June 2020 data, PE companies currently have $361 billion in Asia, which they can spend whenever they want.
Pension and insurance fund manager interest rates lower
Significantly, in countries with low per capita income like India, large amounts of capital are generally not available. In the last decade, the dominance of private equity companies has increased all over the world. Pension and insurance fund managers are putting money in alternative assets due to low interest rates. Because of this, the dominance of private equity companies does not seem to be decreasing.
What are the benefits of being a unicorn
Ankur Pahwa, Partner & National Leader (E-Commerce & Consumer Internet) at EY India, said that for Unicorn, the factors investors consider are profit-making outlook, market size, company strength and business growth potential. etc. are included. According to him, with the process of digitization gaining momentum everywhere and startups being at the forefront of these, investor interest is bound to increase. The speed at which the amount is coming in may be higher than the level of previous years.