Startups Target Profitability, Ditching Growth-at-Any-Cost

Over the next two years, several early-stage startups in India are expecting to break even

- Priyamvada C.

For long, Indian startups were celebrated for chasing growth at any cost—they were free to burn through bales of investor money to acquire customers even as losses mounted. Then COVID and the funding winter forced mature startups to focus on profitability—a recalibration that's trickling down to early-stage startups as well.

Over the next two years, most early-stage startups in India expect to break even, while many late-stage firms have turned profitable, according to a survey by venture debt firm Innoven Capital. The survey, which covered over 100 founders across sectors, underscores a trend reversal in the past 12-18 months. Investors are placing a premium on sustainable business models and healthier unit economics (getting more bang for the buck), pushing even fledgling startups to prioritize profitability. 28% of startups were early-stage businesses, and the rest were growth and late-stage firms. "While the bias for profitability versus growth was more prominent in late-stage companies, even early-stage startups are cognizant of keeping a balance between growth and cash burn," Ashish Sharma, managing partner told Mint. "There's realization that investors gravitated towards more sustainable business models."