Cash flows, margins to guide start-ups: Birla

Competition for investment & FOMO have pushed up valuations, he says

- DEV CHATTERJEE

As the valuations of start-ups reach A Financial metrics such as healthy cash flows and gross margins will guide future behaviour and trends, chairman of Aditya Birla group, Kumar Mangalam Birla said on Friday.

Birla said the world is awash in capital and there has perhaps rarely been a better time to be an entrepreneur, as everyone from angel investors to public markets line up to back ideas. “The competition for investment opportunities and the fear of missing out (FOMO) have driven up valuations of many fledgling companies to stratospheric levels," he said.

"Historically, the key question for any new business was whether it fulfilled an unmet consumer need. A hallmark of some new businesses today is that they seek to use the brute force of capital, combined with smart technology and operations, to create new needs that you didn't even know existed," he said.

For example, Birla said a customer is nowadays receiving groceries at his doorstep in less than 10 minutes and whether it is a service that one cannot live without? "Clearly many consumers think so.