At a time when investors are reducing exposure to high-growth startups and pushing portfolio companies to chase profitability, concerns over revenue growth are keeping startup founders up at night, said a report on December 15.
Out of about 250 founders who were surveyed, 65 percent said that revenue growth still stands as the biggest concern for them, even over cash burn and fundraise, according to venture capital firm Elevation's Founder Pulse Report 2023.
The report also highlighted that while founders building for the business-to-consumer (B2C) space are focusing on curbing the burn, business-to-business software-as-a-service (B2B SaaS) founders are concerned about longer and tougher sales cycles. Meanwhile, among fintech founders, 55 percent identified the regulatory environment as the biggest concern.
“These are very good signs of discipline being induced in the environment,” Mridul Arora, partner at Elevation Capital, told Moneycontrol.
This comes at a time when monthly funding to Indian startups hit a six-year low in November. The last two weeks, to be sure, have seen heightened funding activity to startups signaling some relief from the long funding winter.
In the report, about 50 percent of founders see fundraising becoming easier over the next year. However, over 55.5 percent of the founders who make up about 139 in total said that startups need to have a minimum runway of about 18 months.
In fact, about 58 percent of founders are aiming to become profitable in the near to medium term while 18 percent already claim to have reached this milestone. The report said, two out of three founders in the survey said they reduced their monthly burn rates over the past year. Among these, half have managed to lower their burn by at least 30 percent, it added.
Of those who brought down their burn in the last year, 38 percent identified marketing as the area where spending was most curtailed. Startups in India, meanwhile, let go more than 30,000 employees since the beginning of 2022, Moneycontrol earlier reported.
“...Businesses today in India seem to be definitely getting into better shape than they've ever been. There is, on one hand, the fundamental growth that a country like India provides and at the same time, given the environment, a lot of people have worked really hard to become very disciplined on cost and therefore profitability,” added Arora.
Founders, in the survey, also said that they are seeing signs of improvement in tech hiring, with 50 percent of them noting that tech salaries have cooled down compared to last year. This follows a boom year in which they received multiple job offers and been hired for sky-high salaries and with offers of incentives like BMW cars.
Meanwhile, at a time when many Indian companies are returning to office, about 50 percent of the surveyed founders said that they have either shifted to a hybrid model or continue to function in a fully remote arrangement.
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