Startup Stages Decoded : Money Makers or Money Losers – Part 1

Startups are the new age business corporations of India. History has witnessed that multiple startups that started from Garage are now a true success. However the ability for success in startups is very difficult to achieve which is the case in India nowadays. Major startups are running into huge losses that have been piled up since their inception. There are very few that have been successful like Zerodha or ZOHO. 

Before getting into the current situation of the startup world in India lets focus on the beginning and the stages which make a startup running. Firstly for registration of a startup in India there are 7 major steps to follow. These are Incorporation of Business, Registration with the Startup India, Getting the DPIIT Registration, The recognition of the application, Documents to be submitted for the registration, Getting the recognition number and certain other areas as well. 

Hence post these steps a business gets the certification of being a startup. The further work goes down to working constantly and building a revenue stream that grows alongside the time and also getting the breakeven point as soon as possible. Then comes the funding rounds and getting stakeholders in the business. Hence all this process makes a startup into a well established company over a period of time.

Famous Startups in India

Some of the famous startups in India are Zerodha, ZOHO, CRED, Paytm, PharmEasy, Udaan, Nykaa, Digit Insurance, Swiggy, Dream11, Zomato, Delhivery, Sharechat, Unacademy, Dailyhunt, Eruditus, Meesho, PhonePe, Slice, Ather, PolicyBazaar, Razorpay and many more. 

Out of all of them major startups are facing heavy losses since their inception. Among them the top 9 are :- 

• Swiggy : The company initiated its business operations 10 years ago and is still searching for its breakeven point. The loss of Swiggy was close to 3629 Crore Rs which makes it the highest loss startup last year.
• Meesho : The online selling marketplace company like Amazon has been incurring constant loss in search of more and more sellers. The company has a zero commission policy which lures the sellers to adapt to it and sell. The loss for the previous year accounts to 3247 Crore Rs.
• Udaan : The company was the fastest unicorn in the Indian Startup History. The company laid off more than 350 employees in 2022 itself and had incurred a loss of 3030 Crore Rs.
• ShareChat : It is the largest Indian social network company which runs an application named Moj. The company had incurred a loss of 2988 Crore Rs last year.
• Unacademy : The fastest growing education platform unacademy has faced its ups and downs in the recent years. The company has laid off more than 1000 employees till date and has also cut down its cost by decreasing the management salaries. The loss of the firm widened to 2848 Crore Rs.
• PharmEasy : The online pharmacy company has been operating in a legal grey zone for a long time now. The major rivals of the frim are Netmeds, 1 mg etc. It has incurred a loss of 2731 Crore Rs in the previous year.
• Eruditus : The Education Technology segment has been one of the wealth drowning businesses lately. This is one of such companies. It has incurred a loss of 2645 Crore Rs in last year. The company became a unicorn in 2021.
• DailyHunt : The company is an online news provider and has widened its reach over the past year. It has become a slightly homegrown name. However the stage at which the company is functioning currently has attracted a loss of 2563 Crore Rs in the previous year.
• PhonePe : It is the biggest UPI Application in India. However this was due to the large costs spent behind development and advertising. Currently the company is working with a loss of 2014 Crore Rs in previous year.

The Reason Behind Losses

The major reason that is behind the losses is the amount of money spent on advertising and marketing. All of these companies have been spending a hell amount of money to become a homely name so that their user base expands but the return on investment has not been noticed still. Then these companies come with rate hikes or employee firing procedures to increase profit margins or to cut down expenses respectively. However such a situation in the Indian Startup market has feared investors for a long time. The base behind all this is the lack of conversion to profit factor in the major amount of companies. Their revenue is rising but it is costing them a huge amount of expense which is still not rendering the deserved success or in other words profit.

We would focus on analysing the entire situation of the startup in India and why the investors are now fearing to invest in companies. The situation before and currently has been changed for the investors mindset regarding their investments into the startups and the reason behind it would be decoded in the next part.