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Only 3.5% of the 57 startups that raised more than $100 million this year were profitable.
A total of 57 companies in India raised funding of $100 million or more during January-June 2022

Only 3.5% of the 57 startups that raised more than $100 million this year were profitable.
Image: Business Today

According to the data from Venture Intelligence, a total of 57 companies in India raised funding of $100 million or more between January and June 2022 as against 48 such firms during the corresponding period in 2021.

Interestingly, it also showed that the overall funding for the Indian start-ups this year is almost the same as last year, showing a shrinking deal size.

According to Venture Intelligence, India’s early-stage fundraising climate, particularly seed and Series A investments, is still thriving. In 2021, 250 businesses raised Series A funding, an increase of 75% from 142 businesses in 2020.

The Venture Intelligence data only includes those businesses whose data is accessible because records for not all startups’ EBITDA are available.

Up until June 2022, 57 startups raised $100 million or more, according to Venture Intelligence. Only two of them reported positive earnings, and of those, 45 companies’ EBITDA was unavailable.

The Venture Intelligence service, founded in 2002, is the main source of information and analysis on the financials, transactions, and valuations of private companies in India.

Its research and analysis are frequently used by entrepreneurs, transaction industry professionals, academic institutions, and the media.

In the January to March 2022 quarter, investments in seed and series A rose by 88 percent and 22 percent, respectively (over the same period in 2021).

It also said that from January-June 2021, 48 companies had mopped up $100 million or more. Out of those, 18 companies’ Ebitda was not available in records, while 14 such firms whose data was available reported positive Ebitda.

An industry insider claims that contrary to the previous practice, venture capitalists and private equity funds now focus on the profitability of startups rather than their future growth. Profitability is now a crucial consideration when seeking funding in the future.

Startup world

Startups in India have turned to layoffs to reduce costs due to financial strain. Byju, a unicorn edtech startup, let go of more than 600 workers last week, including both permanent and contract workers.

Before Byju, start-up businesses in India this year also let go of over 5,000 workers at Vedantu, Unacademy, and Cars24. Between January and March of this year, Ola laid off about 2,100 workers, followed by Unacademy (over 600), Cars24 (600), and Vedantu (600). (400). In addition to this, the furniture rental startup Furlenco laid off 200 workers, the influencer-led social commerce startup Trell fired 300 workers, and the credit card company OkCredit fired 40 workers.

In a letter to staff members recently, co-founder and CEO of Unacademy Gaurav Munjal stated: “We must learn to work under constraints and focus on profitability at all costs. Winter is here (financing) Winter must be endured.