The Influence of Unicorns and Soonicorns on Innovation and Venture Capital in Indian Startup Ecosystem: Empirical Evidence

The Indian startup ecosystem has emerged as one of the most dynamic and rapidly evolving markets globally, with significant contributions from high-growth companies known as unicorns valued at over $1 billion and soonicorns companies close to achieving unicorn status. These entities, driven by innovation and strategic risk-taking, have a profound impact on the broader startup landscape by attracting venture capital (VC) investment flows, influencing market competition, and serving as benchmarks for growth. Despite the attention surrounding unicorns and soonicorns, there is limited empirical research examining their direct and indirect effects on the growth and performance of other startups within the Indian ecosystem. This study aims to address this gap by exploring how the presence of unicorns and soonicorns influences the growth paths of other startups, particularly through the mediating role of venture capital investment flows and the moderating influence of government policy support. A structural equation modeling (SEM) approach was utilized to test the hypotheses, using data collected from startups, venture capitalists, and industry analysts. By employing statistical analysis, the study examines six hypotheses. The study is grounded in Resource Dependence Theory (RDT) positing that unicorns and soonicorns act as catalysts within the startup ecosystem by attracting critical external resources and fostering innovation diffusion, respectively. Results indicate a positive association between a unicorn and soonicorn presence and the overall performance and growth of Indian startups. Additionally, venture capital investment flows partially mediate this relationship, underscoring the importance of funding availability in scaling startups. Government policy support is found to moderate these relationships, with stronger effects observed in policy-rich environments. The findings highlight the pivotal role of unicorns and soonicorns in shaping India’s startup ecosystem and provide actionable insights for policymakers and investors on enhancing the support for high-potential startups. Future studies could track the influence of unicorns and soonicorns over time to analyze how long-term policy changes affect their impact on other startups.