In May, India found its 100th unicorn in a neobank firm called Open. It was undoubtedly a great achievement for the startup ecosystem in the country, which is also known as the third largest startup ecosystem in the world.
However, only 25 of these coveted unicorns are profitable, according to startup tracker Tracxn. This raises a couple of questions: has attaining the status of a unicorn become a fad, and shouldn’t companies focus more on getting unit positive economics than achieving $1-billion valuation?
On the sidelines of the launch of T-Hub 2.0 in Hyderabad on June 28, ET Digital spoke to entrepreneurs and experts to find out what was on their minds.
Hari Menon, co-founder and CEO of BigBasket, said the reason a person would want to build a business would be to make money. “You're not building a business to lose money. Because how long will you get funded? It's not easy for investors to keep funding losses if it is perpetual. You don't have to be a unicorn to breed a business sensibly. If you have reasonable market share, you don’t need to be a unicorn. You just need to build it profitably,” he said.
Mahankali Srinivas Rao, CEO of T-Hub, agreed with this view but was optimistic about seeing more profitable unicorns. Over a period of time, all businesses ultimately have to be cash-flow positive. “It is a question of time. I think the challenge here is keeping a balance between two things — growth and profitability. But I know a lot of co-founders who know what it takes to become profitable, when to turn off the tap on spending and when not to pursue growth aggressively. They are starting to b ..
Read more at: https://economictimes.indiatimes.com/small-biz/entrepreneurship/why-billion-dollar-valuation-is-not-a-measure-of-success/articleshow/92714506.cms