• Latest
  • Trending
Why investors like loss-making startups

Why investors like loss-making startups

May 2, 2023
Hindu temple site in UAE

Diplomats from over 30 countries visit Hindu temple site in UAE

May 29, 2023
PM MODI

Entire planet counting on India-US ties: US Envoy

May 29, 2023
seed

Kaveri Seed looking at more exports to Africa, Asia

May 29, 2023
house of ming

Delhi-inspired ‘House of Ming’ Chinese restaurant in London

May 29, 2023
Foreign Portfolio Investors

FPIs invest Rs 37,316 crore in Indian equities in May

May 29, 2023
The statement of a new Parliament

New Parliament building to herald rise of developed India: PM

May 29, 2023
Photo credit ,min.of mines

Over 120 Start ups & 20 major industries to take part at maiden Mining StartUps Summit to be held on May 29 in Mumbai

May 29, 2023
indo-uk

UK to enhance science, innovation ties with India

May 27, 2023
Nepal PM Prachanda to embark

Nepal PM on 4-day India visit from May 31

May 27, 2023
medicine norms

Pharma industry should focus on quality to compete globally

May 27, 2023
Growth

India to be 4th largest economy in 2 yrs: Vaishnaw

May 27, 2023
The statement of a new Parliament

PM to inaugurate new Parliament building on May 28

May 27, 2023
  • Login
  • Register
Blitzindiamedia
Monday, May 29, 2023
Contact
e-paper
  • Economy
  • India
  • International
  • News
  • Legal
  • TheBlitz Special
  • Opinion
  • Social
  • G20 PODIUM
  • More
  • Videos
  • Hindi Edition
  • UK Edition
No Result
View All Result
  • Economy
  • India
  • International
  • News
  • Legal
  • TheBlitz Special
  • Opinion
  • Social
  • G20 PODIUM
  • More
  • Videos
  • Hindi Edition
  • UK Edition
No Result
View All Result
World first weekly chronicle of development news
No Result
View All Result

Why investors like loss-making startups

by Blitz India Media
May 2, 2023
in economy, India, News
0
Why investors like loss-making startups
0
VIEWS

Last week I wrote about Indian achieving 100 unicorns’ status, quite a commendable thing for a developing country. India has become the third largest startup ecosystem after the US and China in sheer number of startups.

However, not everything is hunkydory in the startup world. It’s like a storm-in- the-tea-cup situation. As per recent data, most of the unicorns are not profitable – 57 of the unicorns in deep loss, 18 of them are somewhat profitable and rest of them are registered in Singapore or the US, hence, their data is not available.

YOU MAY ALSO LIKE

Diplomats from over 30 countries visit Hindu temple site in UAE

Entire planet counting on India-US ties: US Envoy

Zoho, InfoEdge, Zerodha, Five Star and Dream 11 are among the top five profitable companies. Zoho and Zerodha are still unlisted, whereas Infoedge is listed and Five Star is an NBFC. On the other side, hospitality major Oyo, Udaan and Flipkart are among the top three loss-making startups.

Situation is not so different in other countries. In the United States, some of the biggest startup companies are making significant loss or have never made any profits. However, investors do not care about it; startups are able to generate more funding from marquee investors and achieve newer valuation levels.

To understand why investors like loss-making startups, we must dive deeper into getting insights about user-growth vs revenue-growth. Investors expect startups to expand rapidly and acquire users even at a higher cost. Many startups spend a fortune to onboard a customer (sometime the onboarding cost is more than what customer would spend on the startup offering). This cost is termed as “customer acquisition cost”.

Higher customer acquisition is also cultural thing – American startups usually have more access to money; hence they launch with the boom, and they acquire thousands of customers within weeks. Europeans’ startups focus on product and profitability before building the customer base as they don’t have similar funding available as their American counterparts. In India, money from investors comes late but when it comes, it brings pressure and targets for the startups to acquire customers.

Investors expect startups to tab into the large domestic market and onboard customers at whatever cost. In the process, startups lose focus and cost go spiral, resulting in the loss

Being a large domestic market, one of the biggest advantages of India sometimes becomes a disadvantage of make it for the startups. Investors expect startups to tab into the large domestic market and onboard customers at whatever cost. In the process, startups lose focus and costs go spiraling upwards resulting in the loss.

In 2012, Facebook was criticised by the analysts for failing to meet the revenue growth expectations. Facebook by then had 1 billion users and was the largest social media in the world. However, Facebook was not making enough money. On the other hand, Amazon was going for revenue growth without adding many customers, hence, always remained profitable.

The sweet spot in the discussion is how to maintain the balance between user growth and revenue growth – it can be achieved simultaneously. It takes planning, detailed planning and little creativity to find the alignment between the various stakeholders (shareholders, customers, employees, and investors). It is ultimately the enduring vision of the entrepreneur to pivot the model as per the need of the market and remain competitive.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Our Visitor

023149

POPULAR NEWS

  • Rev Daaji with Sh Parshottam Rupala ji ,Member Rajya Sabha

    Following the guidance of the heart – the only way forward into future

    0 shares
    Share 0 Tweet 0
  • Scholar administrators are witness to an era

    0 shares
    Share 0 Tweet 0
  • Education with Best of the East and the West

    0 shares
    Share 0 Tweet 0
  • Grade 11 students from the Jamnabai Narsee School (JNS), Mumbai raise INR 57.69 L to support underprivileged students and their families with ration kits for a year.

    0 shares
    Share 0 Tweet 0
  • A corporate lawyer, visionary, who is promoting global prosperity & business

    0 shares
    Share 0 Tweet 0
World first weekly chronicle of development news

© 2023 Blitz India Media -BlitzIndia Building A New Nation

Navigate Site

  • About us
  • Contact
  • Videos
  • Team

Follow Us

No Result
View All Result
  • Home
  • Economy
  • News
  • Nation builder
  • Rising India
  • Multilateral
  • G20 podium
  • Globetrotting
  • New India
  • Social
  • Team
  • Download
  • Videos
  • UK Edition
  • Hindi

© 2023 Blitz India Media -BlitzIndia Building A New Nation

Welcome Back!

Sign In with Google
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In