India’s once-thriving economy has come to a grinding halt due to the novel COVID-19 virus, which resulted in a steep fall in both production and demand. With revised forecasts predicting a sub 2 percent growth, Asia’s third-largest economy, along with many other developed nations, is facing a massive slowdown. However, unlike other markets, India has the potential to bounce back much faster and be on track to have a USD 5 trillion economy by 2025 simply by bolstering the burgeoning start-up ecosystem that will further create more valuable Unicorns.
India has the ability to build more than 200 Unicorns among half a million start-ups up over the next 3-4 years, up from the existing 50,000. In 2019, the country was ranked as the third-most preferred destination for start-up investments. However, despite all the investments the country has bagged, the country has produced only 36 Unicorns so far, compared to that, China has built the highest number of Unicorns at 206, followed by the US at 203.
While there is no doubt that the number of Unicorns in India is doubling every year and that it could become a “Start-up Superpower” given the massive intellectual and creative talent it has, it at present remains a distant dream due to the lack of enough accelerators and incubators. The country’s start-up ecosystem at present is far behind US and China, that have over a hundred accelerators, including the likes of Y Combinator and 500 Start-ups, to help companies with the idea-stage financing and potentially turning them into Unicorns.
According to a report by CB Insights, In 2019, Indian start-ups received funding worth $14.5 billion, which is 9.3x lower than what their peers received in the US. The reason behind such abysmally low financing is the lack of accelerators. Just to put things into perspective, China alone has over 32,000 accelerators, and in India, accelerators and incubators combined are about 600.
*Source: CrunchBase, CB Insights and Tracxn
Taking cognizance of this major roadblock the Indian start-ups face, India’s first and the most massive integrated incubator, Venture Catalysts (VCats) has launched an accelerator VC called ‘Accelerator Fund’ (9Unicorns) that is built just for Indian startups. 9Unicorns, founded by VCats founders-- Dr. Apoorva Ranjan Sharma, Anuj Golecha, Anil Jain and Gaurav Jain, is modelled on the lines of US-based Y Combinator.
For the uninitiated, Y Combinator is an accelerator-based out of San Francisco that provides seed funding for start-ups, helping early-stage companies with their expenses and, in turn, stay afloat. Started in 2005, the American seed accelerator has helped more than 2,000 companies so far, including Unicorns such as Airbnb, Stripe, Dropbox and. An interesting trivia about the start-ups mentioned above is that these came up during the 2008 financial crisis. Hence, the launch of 9Unicorns during the global pandemic can also give rise to the birth of more Unicorns.
“Recession is the best time that can be utilised to create a startup economy. It is only possible if we have a strong accelerator network that we lack currently and precisely the reason why we have launched 9Unicorns. The aim is to help startups keep up with the growing sizes of idea-stage financing and create more global Unicorns from the country,” said Dr. Sharma, who is known to have started India’s first integrated incubator Venture Catalysts (VCats).
He has curated and mentored companies such as SoftBank-backed, and male grooming products manufacturer Beardo.
Dr. Sharma, who has a Ph.D. in Incubation from Amity University and MBA & Incubation training from UC Berkeley, feels that most of the startups struggle while raising the first round and mostly depend on friends and family, and 9Unicorns aims to be that “friends and family” series for the early-stage or seed-stage startups.
He also believes that over the past one decade, the seed stage has offered exits to investors in multiples of 100X among the existing Unicorns globally, which is also a reason behind the creation of 9Unicorns that will only invest in startups in the ideation stage.
9Unicorns is a $45 million sector-agnostic accelerator VC fund that intends to offer $100k for 5-7 percent equity per startup. These startups would then be eligible for a follow-on round of $500k to $2 million that would be funded by a syndication of VCats Network and global VC funds. Plus, they would receive 3 months of the accelerator and 18 months of post incubation support. 9Unicorns plans to write the first cheques worth $100,000 for early-stage startups curated and selected after thorough due diligence.
Some of the key differentiators of 9Unicorns are:
- It, in syndication with VCATs, will provide 24 months of capital access to the selected startups.
- It will help startups generate business leads by giving them access to a network of over 500 corporates and VCATs CXO network.
- Access to Unicorn and other leading founders in the startup ecosystem through VCats network for mentorship and guidance.
- Help them with global exposure through VCats Global Growth programme.
- Experience sharing and exclusive interaction with category leaders and leading startup founders, and mentoring by super angels and CXOs in different sectors.
“The idea behind 9Unicorns was to create a platform to help innovative start-ups by providing initial hand holding with funds and proper mentorship so that they can thrive and graduate to the next level with a proper go-to-market strategy,” said Anuj Golecha, co-founder, 9Unicorns.
Golecha, a certified Chartered Accountant and seasoned professional with invaluable cross-industry experience, further added that the access to corporates and open innovation is the need of the hour and 9Unicorns sits at the right juncture to provide early stage companies with unparalleled access to the top corporates of India.
“At 9Unicorns, we will be backing driven and execution-oriented entrepreneurs by removing roadblocks for entrepreneurs. The overarching idea is minimal interference and maximum support. 9Unicorns invests in very early stages, and traction for such startups is like oxygen. Access to fast capital, business and talent networks go a long way in helping founders focus on product & customers” added Gaurav Jain, who has experienced the Silicon valley startup culture first-hand and returned to India just over a year ago. He is a Stanford MBA and IIT alumnus.
To this Anil Jain, an industry veteran and co-founder of VCats, added, “The idea of 9Unicorns is to create a portfolio of 100 startups in the next 30-36 months and help create more unicorns out of its stable. Plus we plan to bring in the concept of Rolling Admissions and implement a conveyor-belt approach.”
VCats, which has incubated more than 90 startups since its inception, has helped these startups raise over $168 million so far and would also help 9Unicorns in its journey with funding and mentorship. VCats have been an early investor in startups such as Innov8, Beardo, PeeSafe and BharatPe amongst others. It strongly believes that despite a global economic depression, the Indian startup ecosystem would continue to grow as investors are viewing this slowdown caused by COVID19 as more cyclical in nature rather than structural.
VCats as a platform over the last four years has developed that capability and at present has been investing in four deals a month in the range of $500K - $2Mn per transaction. So far it has had 30 successful exits with 3X to 27X multi-bagger investment returns to investors and 9Unicorns is expected to cross the milestones achieved by VCats through its systematic investments and is well placed to be the first accelerator VC fund with strategies comparable with that of China and the US.
9Unicorns in India's First Accelerator VC. It provides acceleration support & seed funding to early stage startups. 9Unicorns provides funding upto $100K per startup in the first round, and $500K-$2Mn in successive rounds with its co-investors. From idea stage to angel stage, it supports startups across various themes & sectors.
9Unicorns' strength and focus is on a hand-on support ecosystem for startups, beyond capital. Startups take money from 9Unicorns for access to a wide network of successful category leading founders, CXOs of large corporations, seasoned angel investors and partners of global VC funds. Every portfolio company receives acceleration support for three months and post-investment support of 18 months.