The nation of 1.3 billion people has seen the rapid adoption of smartphones in recent years, explosive growth of inexpensive internet services and a new generation of ambitious entrepreneurs.

“Large funds such as Naspers, SoftBank and Tiger Global have significant amounts of capital to invest and these start-ups are now on top of their list,” said PN Sudarshan, a partner at Deloitte.

But several start-ups have emerged recently to signal the potential in the South Asian country. Digital payments giant Paytm reached a valuation of US$16 billion, making it the most valuable in the country, according to CB Insights. Online-education start-up Byju’s is raising money at a US$15 billion valuation, Bloomberg News reported last week.

Flipkart, the e-commerce giant acquired by Walmart Inc in 2018, is targeting an initial public offering in the fourth quarter that could value the company at more than US$35 billion.

The venture investments are helping to diversify India’s industry, long best known for tech services companies such as Tata Consultancy Services Ltd and Infosys Ltd.

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A Credit Suisse Group AG report last month found there are about 100 unicorns in India with a combined market value of US$240 billion, in sectors from e-commerce and fintech to education, logistics and food-delivery.

“India’s corporate landscape is undergoing a radical change due to a remarkable confluence of changes in the funding, regulatory and business environment in the country over the past two decades,” the report said.

“An unprecedented pace of new-company formation and innovation in a variety of sectors has meant a surge in the number of highly-valued, as-yet unlisted companies.”

During the coronavirus pandemic and the stringent lockdowns of last year, more than 1,600 new start-ups were founded, taking the total in the country to over 12,500, according to a January report by Nasscom, the country’s technology industry trade body.

More than 55 of these are potential unicorns, the report said, what the venture industry refers to as “soonicorns”.

Like in Silicon Valley, executives who got experience at leading start-ups such as Flipkart and Paytm are breaking out to set up their own companies, and entrepreneurs who have had successful exits are turning to their second or third start-ups.

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“The surge of funding and the breeding of unicorns is not a surprise because India has the third-largest start-up ecosystem in the world and the third-largest market for such start-ups,” said Pranav Pai, managing partner at 3one4 Capital Advisors LLP.

Pai said he knows of at least six new unicorns that will be minted in the next few months. While US$20 million rounds were notable five years ago, start-ups are scaling very quickly and raising US$100 million to US$200 million rounds nowadays, he said.

The investor checks out a few hundred start-ups each month on average.

“The difference is, instead of encountering just one high-quality start-up among those, we now see eight to 10 every month,” said the venture capitalist whose earlier fund Arin Capital backed edtech start-up Byju’s and the newly-minted e-pharmacy unicorn, PharmEasy.

Many investors will see their earlier bets come full circle as a dozen Indian start-ups prepare to head to the public markets later this year or early next.

“Such exits will further boost investor confidence, increase liquidity and fuel a new frenzy of funding,” said Sudarshan.