Valuations are high in the start-up sector, with losses also high

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- On one side of the startup coin is its attractive value, on the other side of the coin there is a pulse of loss.

- The loss of unicorns showing huge value is in lakhs of rupees. The total loss of India's 51 unicorns is 48,582 crores (approximately $6.5 billion). This startup has a revenue of 1,82,746 crore rupees (approximately $24.53 billion) in 2022.

- The concern here is that we have been hyping the success of start-ups but when their losses mount and valuations break, the bubble is likely to burst...

Looking at the valuations of startups in India, it is natural to assume that these companies will be successful and their work will be exemplary for emerging companies, but the other side of the coin is very interesting. In short, the valuation of a startup can be compared to a show case and knowing the loss of the company by looking inside can be called a godown.

One side of India's biggest startup coin is its attractive value, while the other side of the coin has a heartbeat. A sad fact is that unicorn (value over one billion dollars unlisted) startups are financially floundering. Such unicorns are being praised but it is necessary to pay attention to some facts behind the scenes.

The loss of unicorns, showing huge value, is in lakhs of rupees. The total loss of India's 51 unicorns is 48,582 crores (approximately $6.5 billion). This startup has a revenue of 1,82,746 crore rupees (approximately 24.53 billion dollars) in 2022. As many as 47 unlisted startups raised a combined $33.65 billion with a combined value of $168 billion.

The four listed startups Nayaka, Paytm, Zomato, and Delhivari have a combined value of $29.26 billion while their combined loss is 4588 crore ($615 million). This is 20,790 crores (approximately 2.80 billion dollars) as the company's revenue.

Some of the startups in India like Elastic, Mog Leaks, Zetvac, Of Business, Udan and Mensa Brands are also in the list of loss making units. It can be said that Udan is at the top in loss making units with 3123 crores.

Some even make a profit. For example, a company in Gurgaon became a unicorn in July 2021. In December 2022, the company crossed the valuation of five billion dollars. Its lending division was called Oxyzo Financial Services. Its value also crossed one billion dollars. The company used to give loans to small businessmen to buy raw material. This company made a profit of 69 crores.

Udan had raised $1.5 billion in funds. Its value was 3.1 billion dollars. Off business as well as startups like Moggy Leaks have also proven to be profitable.

If we look at the online market place in India, Indian companies have created a value of more than 100 billion dollars. Companies associated with B2C market have raised 50 billion dollars.

It has become difficult for e-commerce platforms to raise funds due to the slowdown in the market, increased interest rates by the US Federal Reserve, etc.

Startups are involved in various sectors. In Derak, they do not incur losses, but it cannot be said that all of them make profits.

Two other areas of loss-making startups include finance and education. Both these sectors known as fin tech and ad tech can be said to be loss making units. There are as many as seven fintech unicorns. It has raised a total of $4.09 billion. Their combined worth is $24.49 billion. They have collectively incurred a loss of only 5247 crores.

If Paytm is added to this list, the loss may increase to 10,932 crores. India shines in the news for various reasons. It has become the largest unit of deficit account. Its loss is 5610 crores. However, its revenue has been seen increasing.

Walmart-backed phone Pay is at a loss of Rs 2014 crore. Walmart has recently given the company $200 million in funding. Half of the eight billion UPI transactions are through phone pay. At the opposite end, Pay TM also incurs losses. Its revenue is 5264 crores while the loss is 2396 crores. PineLabs, the most funded fintech, has a fund of $1.60 billion, valuing it at $5 billion.

Looking at the Edtech sector, its top five startups have a combined loss of Rs 9157 crore. Revenue is 4153 crores. Byju's loss is 4589 crores while its revenue is 2280 crores. Finally, its revenue was estimated at 22 billion dollars.

Logistics startups collectively raised $5 billion in funding. Their combined valuation is 14.5 billion. Swiggy, which has not been listed, has also registered a loss. Its loss is 3629 crores while its revenue is 6120 crores.

The concern here is that we have been hyping the success of start-ups but only when their losses mount and valuations collapse.

Then the bubble is likely to burst...

A startup in the wake of Make in India

In India, the start-up has received the same boost as MakeIn India. Chances arose for many new fields. The start-up started in the space sector grabbed the attention of the world. A private satellite was also considered an important step. People who don't have the financial capacity to turn their ideas into big businesses were seen in startups. Finance and online education startups started getting welcome during the corona period. Foreign investors also seemed to be receptive to new ventures. Youth with new ideas could realize their dreams.


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