Age of Performicorns: How 'profitability' and 'performance' are the new buzzwords in India's start-up world

Much has been written about the funding winter that Indian start-ups are facing. VCs would rather hold on to the money raised, stocking up on dry powder, than repeat the mistakes of earlier years when they rushed in to fund ventures without undertaking detailed due diligence only to see them teetering on the edge or shutting down. The fact that several storied start-ups across sectors—think BharatPe and Byju’s—have also thrown up serious governance issues has added to the problem. Gone are the days when there would be a unicorn born every week. In fact, 2023 has seen just two start-ups reaching unicorn status. Deal velocity slowed down considerably in 2023, with the time taken to close deals now stretching anywhere between four to six months compared to earlier when VCs would jostle to close deals in days. Deal volumes dropped by around 56 per cent in 2023 compared to the heady days of 2021, and deal value to one-fifth of that year. Today, the buzzword across the Indian start-up ecosystem is ‘profitability’. Chastened by earlier setbacks, both VCs and start-ups are realising that the path to profitability is the only route to survival: start-ups must have a clear profitability game plan, and be sustainable and scaleable. Rajat Tandon, President of the Indian Venture and Alternate Capital Association, calls them ‘performicorns’.

However, despite the tough times, it’s not as if India’s start-up story is in danger. The animal spirits of Indian entrepreneurs are alive and kicking, with some serious backing from the Narendra Modi government, whose Startup India initiative, launched in 2016, has gained major momentum. Till date, over 117,000 start-ups have secured recognition from the Department for Promotion of Industry and Internal Trade (DPIIT), which runs the Startup India initiative. Entrepreneurs are rushing to set up new ventures, and several start-ups are ensuring they do everything right to get their ventures to profitability and scale. Many ventures are also on the cusp of tapping the public markets, having learnt from the knocks some start-ups took when they went public. Valuations are getting more realistic, and ventures more real. The Indian start-up story is only getting more exciting.

It is against this background that we bring you the BT Upstarts: India’s Coolest Start-ups—35 ventures selected from a long list of exciting ones by a stellar jury comprising Srinivas Rao Mahankali, CEO of T-Hub; K. Ganesh, serial entrepreneur and Promoter of bigbasket, Bluestone, and Portea Medical; Padmaja Ruparel, President of the Indian Angel Network; Siddharth Pai, Founding Partner at 3one4 Capital; and Anas Rehman Junaid, Founder and MD of Hurun India. This issue, helmed by Prerna Lidhoo and Binu Paul, is evidence that 2024 holds the promise of many ‘performicorns’ being born. Happy New Year!