This year, as many as 31 Indian startups have already hit the billion-dollar valuation, thereby earning the coveted ‘unicorn’ title. In 2020, India saw all of seven unicorns, and in 2019, six. April 2021 saw 6 unicorns in 4 days – a week that was quite unlike another. The investment bonanza spanned healthcare, social commerce, social and content platforms, and fintech. And the rush is by no means over. According to a Credit Suisse report, India has around 100 unicorns with a combined market value of USD 250 billion across sectors like e-commerce, fintech, education, logistics, and food delivery.

One factor triggering the surge in Unicorns this year could be the pandemic as Covid-19 expanded the total addressable market for the internet across multiple categories due to accelerated digital adoption. The maturity of the startup ecosystem and the accelerating infusion of capital investments in the country by the big boys of the world game such as Tiger Global and Softbank are also reasons driving this surge.

However, these factors are common to the startup ecosystem. So what makes one startup a unicorn and the other not?

Here are the four things that are common to most of the Indian Unicorns

Disruptive innovation

Unicorn startups are those who disrupt the field they operate in. Take the Uber example. Uber completely disrupted the way we view taxi services and altered the way we commute. Airbnb changed the world of travel and hospitality indelibly. In the Indian ecosystem, unicorns like Paytm, Meesho, PharmEasy, CRED, Urban Company, and Flipkart, etc. flipped the market they were operating in.

Zeta, the startup that got its unicorn status this year, for example, is a neo-banking platform for the issuance of credit, debit, and prepaid products that allow companies to launch engaging retail and corporate products.

Ground-breaking, disruptive innovation contributes greatly to reaching unicorn status. Along with this, the solutions offered by startups of unicorn potential are also the first of a kind in their industry. BharatPe, for example, launched India’s first UPI QR code for merchants, and it has now expanded into other financial services.

These startups change the way people do things and successfully create a necessity for themselves.

Deeply consumer-focused

Identifying the explicit and implied needs of the consumer also helps startups get closer to becoming unicorns. Research shows that almost 62% of unicorns are B2C companies that make focused efforts to make things easier for their customers. Reports also show that 87% of unicorn products are software products, 7% of them are hardware products and 6% fall in the other product and services category.

The objective of unicorns is to identify customer pain points and create opportunities to deliver true value. Urban Company, for example, created an all-in-one platform that helps users hire premium service professionals, from masseurs and beauticians to sofa cleaners, carpenters, and technicians.

Be it keeping things affordable or making things easier for the customer in her day-to-day life, having a strong consumer-focused solution has been a common trait of all unicorns.

Driven leadership

One thing common across leaders of unicorn startups is that they don’t view leadership as a noun. For them, leadership is a verb. Almost all unicorn startup leaders realize that along with managing numbers they need to become enablers of team success.

Leaders in such startups understand the value of employees and the contribution of each team member that adds up to the overall success of the organization. To build a unicorn company, you need to build a high-performance team and create opportunities for growth for their team members. The leaders in these companies know how to hire the right people and then, how to keep them engaged, motivated, and aligned with the growth goals of the company.

These leaders also understand the importance of creating a Class A Culture within their startup, know how to engage a multi-generational workforce, and take focused efforts to create high-performance teams that create extraordinary impact through performance.

Extraordinary employee contribution

Unicorn startups are only called so because of the statistical rarity of a successful startup. However, if we look closely, we find that to reach this status, most startups have had extraordinary employee contributions and support. Given that startups are always cash-strapped to start with but need high-quality talent at the start to drive success, most unicorn startups used robust ESOP strategies to attract and retain the right talent.

Licious, one of the newest companies to join the unicorn bracket, for example, launched their first stock option plan for over 800 staff across functions including processing centre staff, delivery staff, and corporate employees amidst rapid expansion plans. In August they said that employees could monetize their stock option and also announced a buyback option worth 30 crores.

The company did this as they believed that this move would provide employees with collective ownership of the organization’s destiny and feel that this is a great way for employees to feel valued and recognized. Their employees are certainly not complaining.

Most of the unicorn startups in India have recognized the value of good ESOP programs and are now using them to keep their senior and middle management happy but also across the board to the right talent.

With the number of sale opportunities and liquidity events increasing in India, the real value and potential of ESOPs as a tool to attract and retain talent has been widely acknowledged now. As such there was a surge in the number of startups offering ESOPs to their employees in 2020.

The startup success rate has picked up pace in the last decade and is likely to continue on its northwards trajectory. This trend in India also doesn’t seem like it is stopping anytime soon especially as liquidity globally stands at record levels. This, complemented with the factors mentioned above, the right economic reforms, and an appetite for risk capital promises the unicorn party will continue.