It is that time of the year when the Oxford Dictionary reveals its word of the year. If we had Young Turks to dawn a similar hat and tell you what the Indian startup word of the year is, well, it would be ‘profit’. But where is the profit? That is the question we have been asking in 2022.
Over $80 billion in startups without a clear path to profitability, total funding in startups has dropped by 35 percent to $24.7 billion in the 2022 year to date from a whopping $37 billion over the same period in 2021 as for Traction.
After the hair-raising excitement of the years passed, over 18,000 employees have been laid off since the beginning of the year. But to be honest, the criticism cannot be restricted to cash-burning, loss-making startups. Investors are also being accused of favouring founders who choose opportunity at the cost of building a profitable business, chasing the valuation of a value is passé in 2022.
Having said that, India's startup story is one of disruption built for a billion people, and as Kunal Bahl recently told me there is no founder who doesn't want to be profitable. So while finding the profitable ones was a challenge we set for ourselves the resilience and perseverance of founders who have pursued the coveted milestone called profit is encouraging.
In this latest episode of ‘Young Turks’, Shereen Bhan spoke to Bhavin Pandya, co-founder, and co-CEO of Games24x7; Srividhya Srinivasan, Co-founder of Amagi; Ananth Narayanan, Founder & CEO of Mensa Brands; and Amitava Saha, Founder & CEO of Xpressbees.
Talking about profitably Narayanan said, "When I started, the philosophy was always you would be fewer capital markets dependent and so while we raised funding and so on, we always wanted to be profitable. We are 18 months in what Rs 1,500 net revenue run rate business and we are EBITDA profitable not adjusted EBITDA, etc. we are just EBITDA profitable.”
He added, "I am actually a lot proud of the fact that we actually turn profitable in seven months. We are really a house of brands, we are trying to build a house of brands, not just an aggregation of revenue and EBITDA and I think that is quite interesting."
Saha said, "While building a logistics business and logistics is a scale business. But I think no logistics company has our scale probably turned profitable in seven years. It is the result of conscious choices that were made over the period of the last few years. But it is also important to remember in logistics, being very small is not the answer. So you have to balance between building scale and chasing profitability, which is very, very important."
Watch the accompanying video for more