Entering the year 2024, despite the cool atmosphere, Indian startup founders have endured a prolonged and demanding period. The preceding year proved to be challenging, witnessing a freeze in the venture capital pipeline and startup funding hitting a seven-year low.
According to Tracxn data, startups managed to secure approximately $8.5 billion, which is one-fifth of the record high observed in 2021.
Mridul Arora, Partner at Elevation Capital, commented on the notable developments in 2023, emphasizing a shift toward high-quality execution, cost control, revenue scaling, and a path toward sustainable profitability. He expressed confidence that this trend is set in motion and will likely persist.
Despite the adversities, a silver lining emerged. Startups demonstrated remarkable resilience, indicating the determination of founders who prioritized strengthening fundamentals over unrestrained growth. Many focused on rectifying anomalies in their businesses, displaying an unparalleled commitment to survival. This shift in mindset is seen as a positive indicator for the future.
Mridul Arora noted that in 2023, almost 40% of Indian unicorns were profitable, with expectations that 15-20 more unicorns will become profitable in 2024.
Ashvin Chadha, Co-Founder of Anicut Capital, predicted that 2024 would be a year of exits, citing the substantial capital raised for Indian startups over the past decade. He highlighted the disciplined lessons learned from the strong performance of public markets in the previous year and anticipated a rise in domestic capital in 2024.
Looking ahead, there is optimism for a rebound in venture capital investment. While not reaching the levels of 2021, investors are expected to approach opportunities with stricter due diligence and a focus on corporate governance, aligning with a more prudent and responsible approach.
Mridul Arora shared that India remains a ripe market for early-stage ideas, with Elevation Capital focusing on consumer tech, consumer brands, fintech, SaaS, and exploring investments in climate tech, space tech, gaming, and the creator economy.
The positive outlook is reinforced by Mamaearth’s Diwali listing, with expectations high for more founders to make their mark on Dalal Street. Notable names like Swiggy, Oyo, and Ola are anticipated to follow suit, bringing renewed optimism to the startup landscape.
In summary, the startup ecosystem, despite its challenges, exhibits resilience, adaptability, and a poised stance for positive growth in 2024.
Watch the accompanying video for the full conversation.