Around 40 tech startups that turned unicorn in the last few years have crossed the $100-million revenue mark as of FY22 thanks to venture capital (VC) funds that have deployed a whopping $143 billion over the last 15 years (CY08 to CY22).
According to a report by management consultancy firm RedSeer Strategy Consultants, unicorns especially in industry verticals such as fintech, e-commerce and logistics have crossed $100 million in revenue as of FY22. What took 18 years in 2000 to reach this revenue milestone came down to 5 years in 2017.
These startups took anywhere from 5 to 12 years to reach the revenue mark and with the ecosystem maturing in the last decade, the time taken to hit the scale has decreased significantly, RedSeer said.
The $143 billion in funding deployed by VCs into the Indian startup ecosystem is currently valued at $804 billion, according to RedSeer’s estimates. At current valuations, this translates to an approximate 4.5X return for VCs on their investments.
“Venture capital has played a central role in helping startups scale hit the revenue milestone. Besides the capital, investors add tremendous value to the companies they fund. In addition, the knowledge of governance, financial prudence and networks brought by VCs are invaluable for startups.” the report added.
However, not all startups have survived and scaled to achieve multi-million dollar revenues.
RedSeer estimates that India has about 12,000 startups ranging in revenue classification from emerging (less than $10-million revenue), growth stage ($10-100 million revenue), to large startups ($100 million to $1 billion).
Of these, 95% belong to the emerging category, 3-4% are in the growth stage and less than 0.5% of companies are large companies with over $100 million in annual revenues.
The consultancy firm said that most startups face scaling challenges in their growth journey since many belong to niche industries which restrict their total addressable market, while others struggle with product-market fit and unsustainable growth.
“Finally, the challenges that sink startups come from poor profitability and bottlenecks with organisation, governance and operations,” RedSeer added in its report.