Profitable Startups in India: FY24 Performance Amid Funding Winter

The Indian startup ecosystem, once a playground for exuberant valuations and sky-high ambitions, has undergone a dramatic transformation. The harsh realities of the funding winter have forced a much-needed course correction. Gone are the days of reckless spending and unprofitable growth. In their place, a new breed of startups is emerging, prioritizing profitability and sustainable growth.

As per data published by Inc42, FY24 marked a watershed moment, witnessing the emergence of profitable startups in India. A significant portion of the startups that have disclosed their financials have reported profits, signaling a shift in mindset. While challenges persist, the foundations for a healthier and more resilient startup ecosystem are being laid.

On his LinkedIn post, Rohit Taneja, Director of Consumer Insights and Consumer Delight at Bombay Shaving Company and Bombae, says,

"Profitability (for startups) has become like health for millennials in their mid-30s. In an unceremonious health check-up, they suddenly realize how important it is to treat the body like a temple (avoiding junk).Then, they wonder how their parents (traditional companies) used to be so fit even in their 50s."

The Silver Lining For Indian Startups in FY24

Despite the challenges, FY24 emerged as a pivotal year for many startups. Of the 36 companies that have disclosed their financials, 26 reported profits, collectively earning INR 3,633 Cr. These numbers signal a shift towards fiscal discipline and operational efficiency, underscored by notable turnarounds from startups like Zomato, PB Fintech, and Mamaearth.

Conversely, 10 startups still reported losses, but the trend of reduced losses indicates a move towards stabilization. Startups like Paytm and Ola Electric, while posting significant losses, have also made strides in cutting down their deficits.

Shantanu Srivastava, Managing Director of Ishan International, commented,

“The funding winter may not be entirely over, but the seeds of a more sustainable startup ecosystem have been sown. As the industry continues to evolve, we can expect to see more success stories of startups that have weathered the storm and emerged stronger.”

Revenue Growth For Startups Amidst Adversity

The cumulative operating revenue for these 36 startups reached an impressive INR 97,270 Cr in FY24, showcasing the underlying strength of the ecosystem. Startups such as Delhivery and BlackBuck managed to slash their losses while significantly boosting their revenues, illustrating that the leaner, more prudent approach is paying off.

Startups like Avanse Financial Services, Go Digit, and ideaForge highlighted the spectrum of growth within the ecosystem, with substantial jumps in profits and revenues, reinforcing the potential for sustainable success even in a constrained funding environment.

Future Outlook for Indian startups

India's startup ecosystem is on a meteoric rise. With an anticipated growth rate of 12-15% annually, the country is solidifying its position as a global startup powerhouse. Its strong innovation capabilities and a burgeoning pool of 111 unicorns, collectively valued at over US$350 billion, underscore this growth. As the fourth-largest recipient of tech startup funding, India continues to attract significant investments. The emergence of three new unicorns and 33 "Soonicorns" in the first half of 2024, coupled with a resurgent IPO market, further solidifies India's status as a thriving startup hub.

A New Dawn for Indian Startups

India's startup landscape has undergone a significant transformation. The funding winter has compelled a shift from valuation-driven growth to profitability. Sectors ranging from fintech (Avanse, InCred) to consumer goods (Mamaearth,Nykaa) and logistics (Delhivery, BlackBuck) are witnessing this change. FY24 marks a pivotal year in this transition.While challenges persist, the foundation for a sustainable and resilient startup ecosystem is being established.