Unicorn Startups Face Valuation Markdowns: Byju’s, Ola, Swiggy Among Those Losing 49% Value in 2023

Introduction

The year 2023 was a tough one for many Indian startups, especially those that had achieved the coveted unicorn status of $1 billion or more in valuation. According to a report by Orios Venture Partners, an early-stage venture capital firm, nine Indian unicorns lost 49% value on average in 2023 due to valuation markdowns by their investors . The report attributed this trend to the shift in the funding dynamics away from the growth-at-any-cost model for startups, which put more pressure on them to improve their bottom line and profitability.

The Biggest Losers

The report identified Byju’s, Ola, Swiggy, PharmEasy, Pine Labs, Eruditus, Oyo, Gupshup and Meesho as the nine unicorns that faced the most severe valuation markdowns in 2023. Byju’s, the edtech giant that was once valued at $22 billion, saw its valuation plummet by 86% to $3.1 billion after one of its investors, BlackRock, cut the value of its holding in the company by 95% . Ola, the ride-hailing platform that had raised $500 million at a $6.7 billion valuation in August 2023 , saw its valuation drop by 35% to $4.4 billion by December 2023 . Swiggy, the food delivery startup that had raised $1.25 billion at a $10.7 billion valuation in July 2023 , faced a 34% markdown to $7.1 billion by the end of the year .

Other unicorns that suffered significant valuation cuts included PharmEasy (90%), Pine Labs (38%), Eruditus (9%), Oyo (72%), Gupshup (32%) and Meesho (10%) . The report cited various reasons for these markdowns, such as regulatory uncertainties, competitive pressures, operational challenges, governance issues and market corrections.

The Silver Lining

Despite the gloomy scenario for some unicorns, the report also highlighted some positive developments for the Indian startup ecosystem in 2023. It noted that 23 unicorns achieved profitability in 2023, led by stock broker Zerodha with $350 million in profit . Other profitable unicorns included Five Star Business Finance ($73 million), MakeMyTrip ($70.3 million), OfBusiness ($55 million), Groww ($54 million), Infra.Market ($36 million), Lenskart ($4.5 million), Nykaa ($4.4 million), BrowserStack ($4 million) and more .

The report also said that India continued to remain the third largest home to unicorns, taking around five and half years to turn unicorn in 2023, which is a step up from the average of eight years it took in the preceding four years . Moreover, India also had a good share of female unicorn founders and repeat founders in 2023 .

The report also mentioned that 13 unicorns were planning to go public in 2024, following the footsteps of 15 unicorns that had already listed on the stock exchanges . Some of the expected IPOs in 2024 included Delhivery, Mamaearth, EaseMyTrip, Freshworks and Policy Bazaar .

Conclusion

The year 2023 was a mixed bag for Indian unicorn startups, as some of them faced steep valuation markdowns while others achieved profitability and growth. The report by Orios Venture Partners suggested that the funding environment for startups had become more rational and realistic, which could lead to more sustainable and scalable businesses in the future.