saas startups: SaaS pips fintech as biggest unicorn creator in 2022: Orio’s Venture Report

A sudden and surprising momentum helped software-as-a-service (SaaS) dethrone fintech as the sector that produced the largest number of unicorns in a year in the country in 2022, early-stage venture capital fund Orios Venture Partners said on Tuesday.

However, many of the SaaS unicorns reached the coveted $1 billion valuation on the back of inflated earnings-to-value ratios, Orios managing partner Rehan Yar Khan told ET.

The market began to correct from February and March onwards as valuation negotiations started to tighten, he said.

“What I would certainly do is I would check the top lines of these companies,” Khan said. “I think what surprised me was that these companies are not very big, and suddenly they were all unicorns.”

He drew a parallel to the US where Nasdaq made new technology companies do large valuations on small revenues at 40x and several hundreds of times multiples.

“I think that’s the story of the unicorns, and I think it’s not going to end well if you ask me,” Khan said, adding that he was surprised that suddenly all these small companies were unicorns.

Hasura, Lead School, Darwinbox and Leadsquared are some of the software startups that reached unicorn status in 2022.

Apart from how SaaS produced six out of 24 unicorns in 2022, other top findings in Orio’s ‘India Unicorns and Exits Tech Report 2022’ included startups that raised $25 billion in 2022, one in 13 unicorns globally was born in India, and that the year also saw 229 acquisitions and four technology IPOs.

This year’s fastest unicorn was Blockchain startup 5ire, which took just 11 months to unicorn through its $100 million funding round in July 2022 after raising a $21 million seed round in October 2021. The slowest was diagnostics company Molbio, founded in 2000, which grossed $85 million by September 2022.

Mumbai-based Orios most recently raised $30 million in additional capital to exclusively support its high-growth, high-profile portfolio companies in June 2021. The portfolio companies include gaming company Zupee, agritech company Krishify, online pharmacy PharmEasy, direct-to-consumer brand Country Delight, online car service company GoMechanic, and EV battery-as-a-service company Battery Smart.

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