Nearly two-third of the country’s startup founders continued to prioritise profit over growth in 2023 for the second year in a row, said a report by venture debt firm InnoVen Capital. It said that 62% of founders said profitability as a bigger focus area, compared to 55% in 2022.
The survey was of over 100 startup founders across stages and sectors. Of them, 30% claimed to be Ebitda profitable in 2023, up from 19% in the preceding year. A downturn in the funding environment since mid-2022 had pushed startups across the board to focus on efficiency and profitability, often to justify their high valuation.
“We are now seeing a higher appreciation for sustainable business models, more focus on unit economics/ profitability and realistic valuation expectations,” said Ashish Sharma, managing partner, InnoVen Capital.
While 2023 saw the lowest funding in seven years for tech startups, most founders expect this year to see improvements in the funding scenario. As many as 85% are optimistic about raising their next round at a higher valuation this year.
Despite this, hiring sentiment is largely tepid, with 61% of the founders surveyed expecting the pace of hiring to stay at the same levels or go down compared to last year.
Founders largely agreed that artificial intelligence is the most-hyped sector at the moment, while B2B and manufacturing still remains under-hyped, the report said. Last year saw scores of founders building AI-based solutions.