Projecting four years down the line, Redseer’s analysis of 100 unicorns suggests substantial improvement in profitability, with the number of profitable unicorns projected to grow from approximately 30 unicorns in FY22 to approximately 55 in FY27.
The report points out that some of the struggling unicorns will pivot to new models, get acquired, or close entirely by FY27.
Redseer’s 'Path to Profitability' report further says that Indian start-up world is truly in the midst of a funding winter. An increasing cost of capital and interest rates, recession in developed markets, a decline in the value of tech stocks, and the slowdown in consumer internet growth have all contributed to the decline in funding, observes Mohit Rana, partner, Redseer.
The top four sectors expected to drive the highest pool of profit in the coming years are FinTech and financial services, B2B, SaaS, and eCommerce, predicts the report.
The report highlights EBITDA margins of PolicyBazaar, Delhivery, PayTM, Zomato, and CarTrade. All of theselisted companies have significantly brought down their losses each quarter. Cartrade has managed to become profitable in Q2 FY23.
Further, the report also highlights that ownership of founders in startups is also limited (0-20%) in 59% of private companies, as compared to public companies (50%+) in 65% of public companies.
According to the reports, listed tech companies like Paytm, Zomato, PolicyBazaar and Delhivery have made significant improvement over the last five quarters.
While Paytm has launched new products to expand its business in new segments. To increase the revenue per customer and reduce the CAC, the company has upsold/ cross-selling to existing customers.
Zomato has increased take rates from restaurant partners and delivery cost from customers. This month, Zomato rival Swiggy acquired LYNK, a Chennai-based logistics platform for brand owners
Policybazaar has cut its losses by reducing cost-of-customer-acquisition (CAC) related marketing expenses.
Delhivery took on backward integration by acquiring full-stack solutions across the value chain. To recall, in December last year Delhivery acquires the Pune-based Algorhythm Tech Pvt. Ltd. that delivers intelligent planning & optimization solutions for enterprise supply chain operations. In May this year, Delhivery made a strategic investment in Vinculum, a global software leader enabling omnichannel retailing for D2C enterprises, brands, brand distributors, and quick commerce companies.
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