Chennai lags other Indian cities in the unicorn race

Chennai: Chennai lags far behind in the unicorn race in India, according to a report by early-stage venture capital fund Orios Venture Partners titled ‘Indian Tech Unicorn Report 2021’ that was released on Thursday.

Industry experts that ET spoke to said that the city has lost out because of the lack of adequate investment in startups in the last 10 years but said that the momentum was picking up now, with the new government coming in.

Bengaluru leads the pack and has been touted as the 'Unicorn Hub' in the report with 18 unicorns emerging from the city in 2021 and a whopping 35 in all. It also happens to be the 7th largest unicorn hub in the world. Delhi claimed the second spot with 13 unicorns while Mumbai boasts 11 unicorns in the same period.


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Interestingly, the report said that Mumbai saw a 3.2x increase in the total number of unicorns in 2021. Chennai had two unicorns emerge in 2021. Jaipur joined the list of unicorn cities in 2021 with CarDekho.

"What we are seeing is basically 10 years of neglect in investing in startups in the state," Suresh Sambandam, CEO of Kissflow and co-founder of SaaSBoomi said. "That focus was last in the 2010-2020 timeframe. Around that time, Telangana invested a lot. Being ranked number four is actually very disappointing. We should have at least been number two."

Sambandam is also the convenor of DreamTN which is a think tank and is also a member of the TN State Planning Commission. He warned that this needs to be fixed or else it will lead to a lot of damage to the ecosystem. He went on to add that culturally, too, we need to have people who look at entrepreneurship rather than seek a job at a firm.

"In the last 10 years, we have really missed the bus. We have a new government, which seems to be doing a bunch of good things, and there is a lot of momentum that's happening in terms of investing in the startup ecosystem. It is still early days but if we don't fix this right now, we will run into an irreversible backlog."

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As per the report, last year was the year of unicorns with 46 new unicorns taking the total number of unicorns in the country to 90. It was also a landmark year for tech IPOs with a total of 11 Indian startups (including 8 unicorns) having raised $7.16 billion through public offerings, the report said.

"It's true that we have lagged behind Bengaluru, Mumbai and Delhi. They've taken a head start. But we realised that and we have started to pick up now. There are quite a few incubators here now and we are seeing a lot of momentum in the ecosystem now. We have started engaging with the successful startups here, the incubators and funding agencies. Next year, we will see more unicorns coming out of Chennai."

She said Chennai has emerged more as the global capacities centre for large organisations and went on to add that many major global banks have their tech centres running out of Chennai, including World Bank. Chennai has also emerged as the SaaS and Deep Tech hub.

"The kind of talent that maybe the space requires migrates to either Bangalore or Hyderabad. And then the funders also went there. And then that became a vicious cycle. So you had the funders there, you had more people going there and that was what ended up happening," a government official told ET.

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The report said that it has taken an average of 7.8 years to make a unicorn in 2021. This average is down from 9.9 years which was the case in 2020. Cumulatively, India has turned 33 unicorns in less than 5 years. It said that the trend that is noticeable is that time has been reducing, as founders with prior founding or startup experience are coming into play.

“Despite witnessing an economic downturn in the first half, it has been an exciting and tremendously promising year for tech startups. In terms of measuring scale for the ecosystem, our report is a clear validation of the value creation that has been achieved through innovation in technology, both in terms of IPO and unicorns," Rehan Yar Khan, managing partner, Orios Venture Partners said in a statement.