A conventional way of thinking is that business is treated as successful when it starts generating profits. But if we analyze, the Indian Unicorns – that is startups valued at more than $1billion. We found that creating value by developing a service or offering a solution to solve the society or business problem is more important than business profits.
That is creating a unicorn requires value creation and not book profits.
So, what it takes to create a Unicorn company?
When we analyzed, we found that almost all the Indian unicorns record an average 2-3 times increase in revenue, but only one or two of them started generating profits!
Swiggy and Zomato: Online food ordering and delivery service providers. Swiggy recorded revenue of Rs. 1128Crore for FY 2018-19 while Zomato recorded revenue of around 1480 crore. Both the companies are more than 5 yrs old, not generated book profits so far.
Byju’s: Founded in the year 2000, this edu-tech unicorn is now a profit-making company. For FY 2018-19 company posted a net profit of $2.8 million. Byju’s learning app is providing e-learning programs from K3 to UPSC, IIT-JEE, and NEET.
Mu Sigma: Tthe company founded in 2004, made big data analytics famous in India. It is providing business solutions through big data analytics and data science solutions. The company’s latest profit data not available readily.
Policy Bazar: A kind of Fintech B2C startup became a unicorn in 2018. It is providing a total solution for buying an Insurance policy. Founded in 2008, the company is not making profits.
Freshworks, Dhruva Software, InMobi: These more than 10 yrs. old, tech companies are providing B2B solutions globally. Saas ( Software as a service) based business problem-specific software solutions are provided by these companies. Of the mentioned companies Freshworks – India’s arm, turned into profits in Fy 2018.
InMobi provides Saas based advertising solutions and Dhruva software which provides data protection and management Saas, yet not booked any profits in India.
ReNew Power: India’s largest green energy- Solar and wind energy producer, founded in 2011 became a unicorn 2017. It is founded by Sumant Sinha, earlier COO of Suzlon Energy. The company having 4300MW of operational and 3200MW under construction capacity It is a profit-making company.
Delhivery: Founded in 2011, it is B2B and C2C logistics courier service provider. Became unicorn in 2019, not recorded profits so far.
Other startups like Dream11: App to Play fantasy sports game online. and Hike Messenger: Mobile messaging application, not running in profits
And last, the giant Paytm: India’s largest Fintech and eCommerce giant is yet to start generating profits. One97 communication, the parent company of Paytm recorded revenue of 3319 crores in Fy 2018-19 but also incurred huge losses.
All in All
If you go through the detail, all the above-mentioned startups are providing unique solutions to the businesses or society. And because of their uniqueness attracting investors, which leads to higher valuation making them a unicorn.
But if we analyze SMEs or MSMEs, all businesses can not become a unicorn. And unicorns are generally created in the tech-driven industry. The manufacturing sector doesn’t have unicorns. So for remaining industries, a business can be sustained for the long term, only if it is profitable. So book profits are a must for long term sustainability.
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