Why Indian Unicorn Startups Fail In 2022?

Why Indian Unicorn Startups Fail In 2022?

Arun R's photo
Arun R
·Dec 14, 2022·

3 min read

The number of recognized startups in India in 2016 is just 472. Startups are the entire technology ecosystem and are the engines of growth of any country recognizing this aspect. In 2016 the Government of India started an initiative called Startup India”. To build a stronger ecosystem to improve Indian startup culture which would improve our economic growth, It improves employment opportunities, Initially, these startups have got success and new ideas have come out and got funding, Some have become unicorns too, As of startup India's data in June 2022 there are 73k startups in India and Most of them are in the drowning stage, In this article, we will go through about Why Indian unicorn startups failing in 2022.

What is a Unicorn Startup?

Unicorn is a word used in the venture fund industry which indicates a tech startup with a total market value of over $1 billion, Aileen Le is a founder of Cowboy Ventures who coined the term ‘unicorn’ first in 2013 while referring to 39 startups having a valuation of over $1 billion. Aileen chose this term to highlight such startup companies.

After the boom, and ease of the electronic and communication industry in India, Unicorn started growing, We can compare this to the United States .com trend back in the ’90s, Where the number of startups has been increased drastically and each of those startups got investment a lot even though not with clear business ideas just by having a .com website they got an investment in a larger scale later the shares and the business which aren’t stable got blow, Investors started dipping out from their investment into the failing model and starts investing into the emerging brands like amazon, Google Etc...

A similar type of scenario will come to companies in India when a startup crash comes to us, Same as these cases, we can compare our current unicorns where they got a Million dollar funding from investors and couldn’t make profits of more than two or three quarters, In 2021 the Indian unicorns have got investment from all sides which nearly 70% of companies got a million dollar investment each.

Why Do They Fail?

There are several reasons why after getting a huge amount of money from investors and still failing to succeed is because they would have had a good product market fit solutions.

We can take quick commerce as an example in India where they deliver grocery, medicines and miscellaneous stuff at a minimum delivery charge, In India, labor cost is very low as the nearby store has a person who can deliver to a whole apartment's doorstep at a time for free and customers will think twice to spend money like 100 - 200 for the delivery from a quick commerce company rather they prefer the local store door delivery for free.

And the next type is the spendthrift company which spends on Ads and creating brand awareness and marketer reach by getting debts and spending more money on advertising than their actual revenue, Here we can take a credit card billing company that has made an advertising campaign in an Indian Premier League where they need to spend money more than their revenue that leads to loss.

Conclusion :

The above-mentioned are some of the reasons why Indian Unicorn Startups fail in 2022. In our upcoming series of blogs, we will also add the companies which will survive in the market and the reasons why they will survive.

Also, read our Article:

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