Startups grow 3.6-fold faster, take only 5 years to scale $100 million topline: Report

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Indian startups took only about five years to reach the $100-million revenue mark by 2022, while the average stood at over 18 years till 2017, as the ecosystem matured over the last decade on the back of a fast-growing internet user base and better capital availability.

According to a recent report by tech and data-driven consultancy firm Redseer, over 40 unicorn and soonicorn startups operating in sectors like fintech, e-commerce, and logistics have crossed the $100-million revenue milestone as of FY22 taking five to 12 years to get there.

Zomato, PhonePe, Mamaearth, Zetwerk, and OfBusiness, among others, are some of the startups that have reached that scale, the report said.

Unicorns are startups that are valued at over $1 billion, while startups that are soon to become a unicorn are known as soonicorns and are valued above $500 million.

The startup ecosystem, as per the report, has produced more than 100 companies with revenues greater than $100 million so far.

The report said venture capital pouring into the Indian startup ecosystem has supported companies in scaling their revenue at a faster pace. Besides the capital, the report added, investors guide their portfolio companies with governance, financial prudence, and networking.

According to the data shared in the Redseer report, venture capitalists (VCs) have invested about $143 billion over the last 15 years in the startup ecosystem. The segment is valued at $804 billion and translating into approximately 4.5-fold returns for VCs on their investments.

Not all scale or survive

The report also said that startups in niche industries often face challenges while scaling as it restricts their total addressable market (TAM). Those in the red ocean market - the industries with a well-defined market space and industry boundaries - operate in a highly competitive environment and need a unique advantage to stay afloat, the report said.

As per Redseer report, India has about 12,000 startups of which, 95 percent belong to the emerging category with revenue less than $10 million, 2-3 percent are in the growth stage with revenues between $10 million and $100 million, and less than half a percent of companies are large, earning over $100 million in revenue.

The reason, the study added, that some startups are not able to survive is due to poor profitability and bottlenecks with organization, governance, and operations.