Indian start-ups take five years to scale from zero to $100 million in revenue: Redseer Strategy Consultants

With the ecosystem maturing in the last decade, the time taken to reach the $100 million mark for start-ups has decreased significantly, and what took 18 years in 2000 to reach has come down to 5 years in 2017, as per a report by Redseer Strategy Consultants.

There are about 100 unicorns and 170 soonicorns in India, it said. As per the report, of these 270, 40+ start-ups in FinTech, eCommerce, and logistics have crossed $100 million+ revenue as of FY22. These start-ups have taken anywhere from 5 to 12 years to reach this scale, the report added.

The report further highlights some key points about the ecosystem:

• Venture capital has a major role in the growth journey.   

Venture capital has played a central role in helping start-ups 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. VCs 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. 

• Not all start-ups survive and scale   

India has about 12,000 start-ups ranging in revenue classification - from Emerging (< $10 million), Growth Stage ($10 – 100 million), to Large ($100 million to >$1 billion). Of these, 95% belong to the emerging category, 3-4% are in the growth stage, and less than 0.5% 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.  

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.  

Finally, the challenges that sink startups come from poor profitability and bottlenecks with organisation, governance, and operations.     

“Redseer’s toolkit tackles various challenges faced by start-ups in the journey to $100 million revenue. Customised solutions from TAM expansion, product market fit, to improve profitability and operational efficiency, our industry experts help start-ups scale to desired heights and solve their challenges,” said Rohan Agarwal, Partner, Redseer Strategy Consultants.  

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