Only 67 Unicorn are left 🦄

I had heard Waycool was also talking to raise at unicorn valuation, but they've fired like 300 people on Monday, so that's pretty uncertain. What to make of Zepto, though?

Heard that the work environment is toxic and they are pivoting to a new revenue model. What's in store,

Been spending way too much time on Grapevine lately - absolutely loving it @Micheal_Scott! Posted the Prosus report takeaways yday - lots of you DMed asking questions. Then I saw NewsAnchor break down the entire Prosus Annual Report - great stuff. I was an Associate at one of the largest VC funds in India, so I enjoy going through new reports and summarising them - found my notes from Bain's India Venture Capital Report 2024. Thought of sharing the unedited summary that I shared with the Partners at the fund, have a bunch of these - can share more if of value to any of you here (ofc removing the confidential parts) Notes: 1/ India's maintaining its gravitational pull despite the global funding crunch. Sure, overall funding nosedived 63% to $9.6B, but we're still the #2 destination in Asia-Pacific. Might not necessarily be a crash, it's a necessary course correction. 2/ Early-stage investing is showing remarkable resilience. Seed deals now comprise 70% of all deals, up from 60%, with average check sizes holding steady at $1.4M. Smart money is quietly positioning itself for the next wave of innovation. 3/ The tech-only playbook is being rewritten. While consumer tech, fintech, and SaaS still command 60% of funding, traditional sectors like BFSI are gaining ground, with average deal sizes jumping from $8M to $15M. We're witnessing the birth of tech-enabled, not just tech-centric, growth stories. 4/ The unicorn factory has hit pause, with only 2 new billion-dollar valuations vs. 23 in 2022. Mega-rounds ($100M+) plummeted from 48 to 15. This isn't a drought; it's a return to fundamentals. The era of grow-now-profit-later is firmly behind us. 5/ Generative AI isn't just hype; it's reshaping the landscape. Funding exploded from $15M to $250M, with 80% flowing to existing companies integrating AI. India's quickly becoming a laboratory for practical AI applications, not just speculative moonshots. 6/ Electric mobility is rewiring itself. While overall funding dipped slightly to $600M+, charging infrastructure investment surged 50%. The real opportunity isn't just in vehicles; it's in building out the entire EV ecosystem. 7/ Exits are defying gravity, leaping 1.7x to $6.6B. Public market sales led the charge at 55%, even as IPOs cooled. LPs are getting liquidity, and the secondary market is proving surprisingly robust. There's still appetite for quality assets. 8/ PE is no longer just watching from the sidelines. These players doubled their share to 25% of investments, going toe-to-toe with traditional VCs. The lines between growth equity and venture capital are blurring, and it's changing the game for late-stage rounds. 9/ We're watching natural selection in real-time. Yes, 35,000+ startups shuttered and 20,000+ layoffs hit the headlines. But companies like Groww and Indifi turned profitable. This isn't a bubble bursting; it's an ecosystem strengthening its foundations. 10/ Domestic VCs are coming of age. While overall fund-raising halved to $4B, homegrown VCs led 90%+ of raises. They're not just following; they're specializing, with thematic funds like Omnivore's $150M agritech vehicle. The ecosystem is bootstrapping its own future. 11/ Regulation isn't just tightening; it's evolving. Angel Tax expanded and lending norms got stricter, but we're also seeing innovative policies like UPI for foreign travelers. India's crafting a uniquely balanced approach to fostering innovation while maintaining stability. Topics we can discuss during our standup: 1/ Can India produce global tech giants if it's primarily adopting rather than pioneering in areas like AI? How do we enable this? 2/ How will the shift towards profitability impact India's ability to foster truly disruptive innovations? Implications for us, how should we be evaluating deals differently? 3/ With domestic VCs leading the charge, how will this change India's startup narrative on the global stage? 4/ Is this maturation setting the stage for more resilient, globally competitive Indian startups, or are we risking our innovation edge? How do we look at thesis driven investing v/s fomo investing? Link to Bain's report - https://www.bain.com/insights/india-venture-capital-report-2024/ P.S. Do note that this is 6+ months old - data points mostly look diff now but sharing it anyways. Will post more as and when I get time :)

So Zepto was the first, InCred becomes the second one. 2 unicorns this entire year 🙀

There are essentially four parties in the startup economy: 1. The Consumer 2. The Enabler(read, Startup) 3. The Service Provider 4. The Investor Now let's look at Game Theory motivations: 1. The Indian Consumer wants to minimise money spent per unit value extracted, the Western Consumer wants to maximise value extracted per unit money spent. (There's a massive difference.) 2. The Startup depending on the stage wants to maximise User Growth and Free Cash Flows. 3. The Service provider wants to maximise financial incentives. 4. The Investor is wants to maximise the XIRR of their fund. For this they need to reach a multibagger liquidity event. Now let's look at what happens when: 1. The Consumer gets f'ed over: The startup attains pricing power through deep competitive moats allowing for monopolisation. They can jack up the prices to ensure nice FCF, greater rewards for Service Providers and great returns to their investors. (Think, Uber can charge anything to you now) 2. The Startup gets f'ed over: The users get bang for their buck, the service providers get good incentives, the investors push for higher growth but unfortunately the startup does not have enough capital to service their Cost of Operations through their unit economics, so they will either run out of cash or investor patience. Either ways, they are doomed. (Think every legit startup that failed) 3. The Service Provider get f'ed over: This is the likeliest scenario as they have the least power in this dynamic. Rewards will be reduced over time or made harder to achieve. They have no option because they got no option for sustenance. (Think any on-demand service providing app) 4. The investor gets f'ed over: Now imagine there is a startup that can balance the act very well. They have a service that users are willing to pay a margin on. They pay their service providers fairly and have decent unit economics. Now, the investor will do halla about destruction of shareholder value from little growth. (Is this the case with BluSmart?) Maybe that's why building in India is tough.