New Delhi: As India’s startup ecosystem matures over the past decade, the time taken by new-age tech companies to reach $100 million in revenue has reduced significantly, according to a study by consultancy firm RedSeer Strategy Consultants. The study noted that the average time taken by startups to reach $100 million in revenue has now come down to just five years in 2017, from 18 years in 2000.
India has around 100 unicorns – startups with a valuation of $1 billion or more – and 170 sunicorns, a company that has the potential to become a unicorn. The report states that out of these 270 companies, more than 40 are operating in fintech, ecommerce and logistics, to cross $100 million in revenue by FY2022.
Currently, India has around 480 startups with revenues of more than $10 million, while less than 60 new tech firms have annual revenues between $100 million and $1 billion.
The study pointed to the role of investors, especially venture capitalists, in helping startups scale from zero to $100 million in revenue. “Venture capital has played a central role in helping startups reach the $100 million revenue milestone. In addition to capital, investors add tremendous value to the companies they fund. In addition, the knowledge of governance, financial prudence and networks brought by VCs is invaluable to startups.”
Overall, VCs have invested around $143 billion in the startup ecosystem over the past 15 years, which is currently worth $804 billion, according to study estimates. At current valuations, this gives a roughly 4.5x return for VCs on their investment.
Pointing to the challenges faced by most startups in their growth journey, the study said that niche industries have restricted their total addressable market, while others have been helped in product-market fit and sustained growth. needed.
Startups in red ocean markets – industries with well-defined market spaces and industry boundaries – operate in a highly competitive environment and need a unique competitive advantage to stay ahead.
The study states that challenges such as poor profitability and bottlenecks with organization, governance and operations are the reasons for startups shutting down.
Last year, 2,404 new-age tech companies ended their operations, more than double the 1,012 that closed in the previous year, according to Traxcn data. Around 266 startups that closed this year received funding from venture capital, angel investors, family offices or institutional investors. The data shows that the companies raised around $290 million.
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