The unicorn club of start-ups in India have come a long way and have created history in the start-up world. After successfully filing for IPOs, they are now turning their attention to profitable investments within their community. By doing this, they want to create an independent investment wing for the industry they belong to. Thus, aspiring start-ups who are following in their footsteps can avail funding without the need to approach other investors or struggle to acquire funds.
What is a Start-up Investment Wing?
Start-ups which have raised the benchmark for the community and have reached high valuations are setting up a Venture Capital arm with a fixed corpus. These VCs are then identifying budding start-ups that belong to the same or similar industry and are displaying disruptive business models and million-dollar potential. Such VCs are called Start-up Investment Wings which are giving back to the start-up community.
Why are India’s unicorns turning VCs?
India’s unicorns are turning venture capital investors because the unicorn club in India is steadily growing with 16 more to be added to the pool in 2021 alone. By 2025, the total number of unicorns in India will cross the 100 mark. Existing unicorns in India like Paytm and Dream11 have developed an increased appetite for growth. They have also developed the need to tap into adjacencies which is pushing these unicorns to set up funds and turn investors.
Investment arms of Dream Sports and Paytm
DreamCap – $250 Mn Corpus
Dream Sports, the parent company of Dream11 (fantasy sports start-up) has rolled out a $250 Mn corpus to fund sports start-ups in India. This investment wing of India’s first gaming unicorn Dream11 will fund start-ups operating in the sports, gaming, and fitness tech spaces.
One97 Mobility Fund – $100 Mn Corpus
One97 Mobility Fund is Paytm’s investment wing with a $100 Mn corpus which is investing in mobile-first early-stage start-ups. They have invested in companies like Oorja Analytics, LeapSky Wireless, Ciqual, TenCube, and Singapore-based TheMobileGamer.
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Dream Sports, the parent company of Dream11 (fantasy sports start-up) has rolled out a $250 Mn corpus to fund sports start-ups in India.
What’s in it for me?
Investment wings of top unicorns in India have already invested $1.5 Bn in start-ups. The trend of unicorns investing in other start-ups kicked off when these companies discovered opportunities to invest in seed capital and early-stage funding. However, off-late, these unicorns are ready to invest in lucrative late-stage start-ups as well.
Indian unicorns have achieved the heights of success, making stellar IPO performances, and achieving billions of dollars in valuation. They are making strategic investments in the start-up world and have already invested in more than 90 start-ups.
Popular names in the unicorn club like Zomato, Zerodha, LensKart have invested in start-ups. But what’s common among their investment strategies is that they are funding their own kind of start-ups:
- Zomato recently invested in Grofers since they are keenly interested in this segment.
- LensKart launched a $20 Mn investment wing called LensKart Vision Fund which will invest in eyewear and eyecare start-ups.
To attract funding from one of these investment wings, your start-up must venture into or belong to one of their close-knit industries. Also, an important thing to note is that these unicorns are mostly interested in start-ups with the potential to become the next unicorns or give rise to the next wave of unicorns in India. ‘Baby unicorns’ with disruptive technology and the potential to reach $100 Mn in revenue in the next few years have a high chance of getting funded by Start-up VC funds.
