Unit economics, total addressable market and founder quality — these are top of the mind for risk capital investors as the startup ecosystem in the country faces its worst-ever downturn. This was the broad consensus at a discussion among leaders of the startup ecosystem at the Global Business Summit.

Moderated by InfoEdge founder and vice chairman Sanjeev Bikhchandani, the panelists at the session on Brave New World: Venturing in Times of Uncertainty, who included unicorn founders and Shark Tank India judges, laid out their key priorities.

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Kunal Bahl, cofounder of early-stage venture capital firm Titan Capital, said that he has taken a consistent approach to investing, and continued to look for positive unit economics even in startups at this phase.
“It doesn’t matter what the market is like… we’re looking for the same things. We’re looking for a fantastic team that has shown some amount of success in whatever they have done before. People tend to focus on large TAMs (total addressable markets) but we look for narrow TAMs… where you can dominate with a small capital,” Bahl said. “Third is discipline around unit economics. Founders will often say that my unit economics will improve with scale… but it almost never does.”

Concurring, Bikhchandani said that if a company’s unit economics is not working on a small scale, it won’t at a large scale.

Pune-based Emcure Pharmaceuticals whole-time director Namita Thapar, one of the investor-judges on Shark Tank India, said that being more “risk-averse,” she focuses more on a potential investment having a large TAM, and a founder who has demonstrated sales, product-market fit and an ability to capitalise on the addressable market.

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Sudhakar Adapa, founder and CEO of FMCG-focussed house of brands firm Bia Brands, said, “Expectations have come down phenomenally… Two years ago multiples being sought on valuations were absurd. Now we’ve all come back to planet earth. There’s a reality check. We’re all going back to fundamentals… Profitability has become a key metric we’re looking at.”Aman Gupta, cofounder and chief marketing officer of direct-to-consumer electronics brand Boat, said that he has taken bets on founders without a business plan or experience. “People have taken a bet on me… If you take a bet on a good founder who knows how to hustle and stay humble, he will return your money. Founder bet is most important for me,” the Shark Tank India investor said.

“I take risks… It’s a high-risk, high-reward market. When we started, no one was taking risk in the electronics space… but Kanwal invested in us,” Gupta said, referring to consumer-focussed investor, Fireside Ventures’ founder and managing partner Kanwaljit Singh. “None of the VCs and PEs invested in us… It’s all about taking risks on startups,” he added.

The Indian startup ecosystem’s overall funding plunged by almost 70% in 2023 amid global macroeconomic headwinds, global conflicts and inflationary pressures. ET has reported that the stress on investments will continue well into 2024, citing investors and operators.

“With the benefit of hindsight, 2021 was a crazy year, and you look back and see that there are many such cycles that have played out,” said Mukesh Bansal, cofounder of Myntra and Cure Fit and also an angel investor. “For me, I find most joy in building outstanding products whether I put on a founder hat or an investor hat. Unfortunately, I can’t do a lot of it on my own now so I’m partnering with great cofounders now.”

Founders on the panel emphasised the importance of execution. Aadit Palicha, the 21-year old cofounder of quick-commerce platform Zepto, said that one of the company’s investors had advised them that the only thing that mattered for a consumer-oriented business was this. “Every other vector, whether it is capital or strategic advantage… it is nothing compared to execution,” he said.

Responding to a question on whether startups should prioritise revenue or bottomline, Palicha said that focussing on return on equity would result in enhancing both those metrics.

Emcure Pharmaceuticals’ Thapar also underscored the growing relevance of impact investing. “It is possible to do good and do well… There are a lot of companies balancing social impact and profitability. Impact investing in this country will get bigger as years go by,” she said.


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