Startup focus increases on profitability after funding winter, say reports
India Startup Outlook report by InnoVen Capital, released on Thursday, indicates that around 62% of founders prioritized profitability over growth in 2023, up from 55% in 2022. Additionally, Orios Venture Partners' report, also released this week, observed that unicorns in 2023 increasingly focussed on profitability, with 23 now in the green. This trend has been generating momentum towards IPOs, with reports of 13 unicorns planning IPOs in 2024, as per the India Tech Unicorn & Exits Report 2023.
The reports also underscored the funding slowdown experienced by startups last year. Late-stage startups were particularly hard hit, witnessing a 70% decline in capital raised compared to the previous year, according to the India Tech Unicorn & Exits Report 2023. Indian startups collectively secured $8.2 billion in 2023, a 68% decrease from the $25.9 billion raised in 2022.
This decline was seen across all stages, with early-stage startups and seed-stage startups experiencing 68% and 57% reductions, respectively. A notable shift has been witnessed in the time taken to achieve unicorn status, now averaging 5.5 years in 2023, down from 8.4 years in 2022, according to the Orios Venture report. However, India saw only two new unicorns in 2023, with a decline in acquisitions to 123, compared to 229 in 2022.
“Though 2023 saw only two unicorns, we are excited to note how in the last four years startups are taking 5 to 6 years to get to unicorn status vs 8 to 10 prior to that. That shows the market has become large. We also love how many unicorns are profitable and in our conversation with several unicorn founders, profitability was a big focus area.
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