From $0 to $100 mn valuation in 5 years: That's how long Indian start-ups now take

India has about 100 unicorns, which includes names like Swiggy, Ola, Nykaa, etc., and 170 soonicorns, such as Ather Energy, SUGAR Cosmetics, Dunzo, and others. With the start-up ecosystem maturing in the last decade, the time taken to reach the $100 million-mark has decreased significantly to just five years now, a new report by Redseer Strategy Consultants said. As per the report, what took 18 years in 2000 to reach $100 million revenue has come down to five years.

eB2B emerged as the biggest sector with $2,250-2,750 million revenue in FY22 followed by foodtech at $900-950 million and gaming at with $500-550 million revenue. The start-up ecosystem in all has produced more than 100 companies of greater than $100mn in revenue.

Rohan Agarwal, partner, RedSeer said, that venture capital has played a central role in helping startups scale to the 100 million revenue milestone. “Besides the capital, investors add tremendous value to the companies they fund. In addition, the knowledge of governance, financial prudence, and networks brought by VCs are invaluable for start-ups,” he said. VCs, the report adds, have invested about $143 billion over the last 15 years (CY08 to CY22) in the start-up ecosystem, which is currently valued at $804 billion. At current valuations, it translates to approx. 4.5x return for VCs on their investments.

But not all start-ups survive and scale. India has about 12,000 start-ups ranging in revenue classification from emerging ($1 billion). Of these, 95 per cent belong to the emerging category, 3-4 per cent are in the growth stage, and less than 0.5 per cent of companies are large.  “Most start-ups face scaling challenges in their growth journey. Many belong to niche industries which restrict their total addressable market, while others need help with product-market fit and unsustainable growth,” Agarwal said. “Start-ups in the red ocean market - the industries with well-defined market space and industry boundaries operate in a highly competitive environment. They need a unique competitive advantage to stay afloat.”

The report says that the challenges that sink startups come from poor profitability and bottlenecks with organization, governance, and operations.  However, not all is lost. With internet adoption maturing, scaling is becoming quicker with some of the key growth drivers being fast-growing internet userbase, capital availability, maturing businesses opening opportunities for enablers and more experienced operators.

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