In a television interview to Aaj Tak, Ravishankar Prasad, senior BJP leader and former Union Minister for Electronics and Information Technology, Communication and Law, claimed that "unicorns" are companies who have earned $1 billion in revenue.
His claim is false since the widely accepted definition of a unicorn is a large startup that has crossed $1 billion in terms of valuation and not in terms of revenue.
Prasad made this claim while speaking to Shweta Singh, an anchor with the television channel Aaj Tak.
Prasad was referring to India's startup environment, and the pace at which Indian unicorn startups were growing and being recognised internationally in the face of opposition jibes that the startup environment had not flourished in India under the Bharatiya Janata Party (BJP) led government
Ironically, the former law minister made this gaffe while taking potshots at Congress leader Rahul Gandhi's poor understanding of the startup economy
His video and words can be found below.
|English (Literal translation)
यूनिकॉर्न का मतलब है आपका रेवेन्यू 1 बिलियन डॉलर, मतलब एक साथ हजार करोड़
|The meaning of a unicorn is when your (the company's) revenue is more than $1 billion, or ₹60,000 crores
He also said that India had more than 100 unicorns, which BOOM found to be true.
What is the difference between valuation and revenue?
In his claim, Prasad swapped referring to the valuation of a startup with its revenue.
Valuation refers to the economic value of a business and is an exercise carried out by the promoters and major investors to sell or merge the company, for taxation, or for a stake sale to potential shareholders, according to the US Chamber of Commerce.
Companies can be valued by their assets, their ability to create wealth in the future or by estimating its current market value in the industry or by a combination of these methods.
The coining of the term "unicorn" - referring to a startup that has crossed a valuation of $1 billion - has been widely attributed to Aileen Lee in 2013. Lee is the Founder and Managing Partner of a venture capital firm called Cowboy Ventures.
Her coinage of the term "unicorn" was first introduced by TechCrunch in an article authored by her, titled "Welcome To The Unicorn Club: Learning From Billion-Dollar Startups". It can be read here.
The term "unicorn" was chosen to represent these companies as they are also creatures that are magical and rare, according to the story.
Her coinage of the term "unicorn" has also been profiled by the New York Times in 2015 and can be read here.
On the other hand, Revenue is defined as the cash generated by a business through its core operations like selling the product it manufactures and by non-operational sources like rent or royalty. This can be read here.
India reaches 100 unicorns
On May 6, the Government of India announced that the country had witnessed the creation 100 unicorns, with a neobanking startup called Open becoming the 100th unicorn in India.
The government said that in 2021, 44 unicorns were minted and in the first four months of 2022, another 14 achieved that status.
Even in its announcement through the Press Information Bureau, the government has said that a startup is a unicorn if it crossed $1 billion in valuation. "The term 'Unicorn' refers to the rarest of the rare startups who become Unicorns attaining a valuation of more than USD 1 billion", the release says.
It can be read here.