Founders of India’s unicorns share an overwhelming sameness – Mint

A successful unicorn founder from India is most likely to be a male graduate from one of the top IITs (Indian Institutes of Technology) who started his firm at a very early age, a Mint analysis of the profiles of unicorn founders shows.

The list of unicorns considered here have been sourced from a recent report by Neelkanth Mishra and his colleagues at Credit Suisse, which showed that India already has 100 unicorns (unlisted firms with valuations above $1 billion), more than twice the number others had previously reported. Two-thirds of these firms started after 2005, the rest are old firms such as the country’s biggest bourse, National Stock Exchange.

The 100 unicorns operate from cities all across the country, and in a range of businesses — from gaming to biotech. But the founders of these firms appear to be a very homogenous lot. About half had a degree from one of the IITs or IIMs (Indian Institutes of Management), a third had a degree from an elite foreign university. Among Indian institutions, IIT Delhi, IIT Bombay and IIT Kanpur have produced the highest number of unicorn founders. Among foreign universities, Harvard University has the highest tally, with several founders graduating from Harvard’s business school.

A degree from an elite college allows easy access to a well-connected alumni network, which helps in hiring the right talent, and securing adequate funding. Raising the initial seed funding is much easier for those who are from IITs, IIMs, or top foreign universities, said Nithin Kamath, a co-founder of Zerodha Broking Ltd, one of the few unicorn founders from a lesser-known college. “But this advantage of being able to raise money based on your background slowly starts disappearing as the startup starts building out the product,” he said.

Engineers & MBAs

A significant proportion of the 100 unicorns are technology or tech-enabled companies. A fourth are either IT or Software-as-a-Service (SaaS) firms. One in ten are in chemicals, energy, industrials or telecom. So it’s no surprise that 38% of unicorn founders have bachelors in engineering. Another 12% have masters in engineering or sciences.

MBAs are not behind. 37% of founders of these billion-plus companies have a masters in business administration. Among this lot, several had an engineering degree before they went for an MBA.

Many may have opted for a B-school with the ambition of launching their own business, given that it is an ideal setting to find a co-founder and test one’s business ideas. Many schools also have their own incubator or accelerator program to help start-up founders. Since most investment partners are also B-school graduates, an MBA also serves as a signal of competence.

Early Start

Those who achieve scale in their business typically start early. Ritesh Agarwal, for instance, started Oyo rooms even before he turned 20. Gaurav Munjal, the co-founder of Unacademy, started uploading YouTube tutorial videos while he was still in college. Along with Roman Saini and Hemesh Kumar Singh, he finally founded his company at just 24. Over 40% unicorn founders, whose age data was available, started their company before turning 25.

Being a young founder allows one to devote more time to their firm. It also allows one to do things in an unconventional way.

However, the youth advantage does not hold in the wider start-up ecosystem, an earlier analysis of a wider set of firms suggests. A 2018 Plain Facts analysis of 560 founders across 330 start-ups by Shailesh Chitnis of data intelligence firm Compile Inc showed that start-ups where founders had 10 or more years of experience were much more likely to scale up than those with lesser experience.

Gender Barrier

True to stereotype, the unicorn list is almost exclusively a male one. Among single-founder unicorns, there are no women at all. Among those with multiple founders, 4% are women.

Overall, the representation of women founders is abysmally low at 3.8%. This is even lower than the proportion of women CEOs in BSE 500 companies, which is 4.8%.

The lack of women is a wider problem in the start-up ecosystem, not just in the elite club of unicorns. India ranked a lowly 49th among 58 countries on Mastercard’s latest index of women entrepreneurs.

A 2019 ORF study by Sabrina Korreck identified five main reasons for the gender-gap in start-ups: unconscious bias, low confidence in business skills, lack of access to finance, lack of family support or child-care options, and lack of safety in workplaces.

India’s unicorns have come a long way. They still have a long way to go in terms of social inclusion.

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