Today: Apr 17, 2024

Winter funds, startups thrive, chase the profit for survival.

3 months ago

TLDR:

– Startups are striving for profitability due to the impact of the funding winter.

                        – Meesho, MobiKwik, and Oyo are among the startups that have reported profitable quarters in FY24.

                        – More startups are expected to become profitable in the coming months as investors and analysts anticipate a shift.

                        – The decline in investments into startups, particularly late-stage or bigger startups, has made profitability critical for attracting investments.

                        – Startups will need to focus on cost optimization and operating leverage to achieve profitability.

                        – Only profitable companies will be able to attract investments and will be subjected to deep due diligence by investors.

As the funding winter continues to affect the startup ecosystem, many startups are now striving for profitability. Meesho, MobiKwik, and Oyo are some of the startups that have reported profitable quarters in FY24 by focusing on cost optimization and operating leverage. It is anticipated that more startups will achieve profitability in the coming months as analysts and investors expect a shift in the industry.

The decline in investments into startups, especially late-stage or bigger startups, has made profitability a critical factor for attracting investments. In 2023, investments into startups reached a seven-year low of $8.2 billion, compared to a record funding of $42 billion in 2021. Late-stage startups were greatly affected, with funding dropping from over $15 billion in 2022 to $4.2 billion in 2023.

Startups that are not currently profitable or new startups will need to focus on achieving profitability to attract investors. Due diligence by investors will be thorough, with a focus on gross margins, unit economics, and cash flows. It is essential for companies to maintain profitability once achieved in order to sustain investor interest.

In conclusion, the funding winter has prompted startups to prioritize profitability in order to attract investments. This shift in focus is expected to continue, with more startups aiming to achieve profitability in the coming months. Only profitable companies will be able to secure investments, and they will need to be prepared for rigorous due diligence by investors.