Indian unicorns chant “trim flab, increase muscle” mantra to survive funding slowdown

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When the going gets tough, unicorns make themselves tougher. Indian unicorns seem to have utilised the long, hard funding winter to trim flab and acquire new muscle to emerge out of the experience stronger, The Economic Times have reported after collating data from the industry.

While growing in size and paring down losses, FY23 data indicate that a considerable portion of the unicorns have erased red ink from their bottomline.

The list of the unicorns that have reported consistent rise in revenues over FY21, FY22 and FY23 includes companies such as Swiggy, OfBusiness, infra.Market, Zetwork, BigBasket, Zomato, Paytm, Dehlivery, PharmEasy and Flipkart group. Both OfBusiness and Infra.Market have been stars by reporting profits for the past five years, the survey found out.

Improving profitability among a large number of Indian startups is also borne out by another trend – a number of them are queuing up to float IPOs. This could also turn out to be a fruitful strategy considering the prolonged funding slowdown that has gripped the market.

At least 25% of Indian unicorns have turned profitable. As many as 20 of out of 83 have reported profits. The number of profitable unicorns was only 13 in 2021-22. As many as 11 unicorns have been consistently reporting profits for the past three years.

The report also stated that 10 unicorns have been displaying strong indications of becoming profitable in FY24 or have or reported profits last year. A revenue rise of 35% was logged by the country’s unicorns.

Since April 2022, startups began struggling through a period of capital supply constraints. Some of the headline grabbing names such as Byju’s and Paytm began negotiating headwinds like never before. While Paytm was pulled up by the banking regulator for non-compliance of KYC parameters, Byju’s that prided itself on being the largest edtech business in the world, had severe corporate governance issues that led to punishment both in India and the US.

Of the 11 unicorns that are registered in the US, six to eight are considered profit-making. The combined losses of the unicorns have fallen 25% to Rs 55,488 crore, while 40% of the Indian unicorns have turned financially sustainable.

The ET Prime Unicorn 100 lists Indian companies with valuation of more than $100 billion. The latest list has been drawn up on the basis of financials for FY23.

The revenue has been sourced from the statutory public filings by the companies. The data is as on May 23, 2024.

As many as six of Indian startups are yet to file their financials for FY23. Since unicorns registered in the US do not publicly disclose their numbers, of the 103 Indian unicorns, financials were available for 83 and they have been processed to arrive at this report.