The 3 freshly minted unicorns in January are Zhihu, URwork & Zoom Communications
By Mihir Dalal
Indian unicorns not as attractive after funding slowdown & mass exodus.
Fundraising has become more difficult and might lead to further underperformance in the stock market, which could hinder successful initial public offerings (IPOs), the primary mode of exit for private equity investors.
Fintech firms in particular are posing a headache for investors as rising valuations create a limbo-like state in which start-ups become too pricey for larger firms to buy, but don’t have business models that are scalable enough for a debut in the public markets
Some U.S. mutual funds are boosting their performance with relatively big bets on private companies such as Uber and Pinterest, which they have been marking up at a rate far greater than the broad stock market.
Venture capital (VC) investment in India plummeted 58 per cent in the June quarter over the previous three-month period, according to a report by KPMG and CB Insights, mirroring increasing investor caution towards funding start-ups. VC investments in India have been on a decline since October-December.
Although the number of deals continued to decrease over the period, reaching 1,886 – the lowest level since Q2-2013, mega rounds worth over $1 billion in “decacorns” like Uber, Snapchat and Didi Chuxing helped buoy investment, the report said.
The fund will act as a fund-of-funds, i.e., it will invest in venture fund managers who in turn will fund startups. The aim of the fund is to invest only in potential unicorns, or startups that are worth over a billion dollars.
As companies achieve scale, they will also be targets for acquisition, a trend that Vietnamese startup ecosystem watchers predict.