Indian startups have substantially improved their profitability in FY24, and going forward, about 50 per cent of unicorns in India will be profitable by FY27, a report showed on Friday.
However, the story is bleak for 20 per cent of unicorns who will likely struggle due to regulatory challenges, plummeting demands and unclear business models, according to market research firm Redseer.
These unicorns could pivot to new models, get acquired by other companies or close for good.
India is likely to have up to 40 listed/IPO ready new-age companies or startups, which can grow to 90 by FY28, according to the report.
With an increased focus on profitability, startups are poised for a promising road ahead, including potential IPOs, according to Rohan Agarwal, partner at Redseer.
In contrast to FY21, nearly twice the number of Indian unicorns are on their way to profitability in FY23.
“SaaS, B2C Product Companies, and FinTech are among the most promising categories to produce IPO-ready companies,” said Agarwal.
These companies have sizable revenues, sustainable growth, a strong EBITDA, and operate on defensible business models, making them strong candidates for IPO.
IPO-bound companies need to focus on three key areas. Firstly, they should prioritise building strong investor relationships and trust, emphasising reputation and transparency.
Secondly, companies must proactively engage with potential investors well in advance of the IPO to establish rapport.
“Lastly, providing clarity on business models and key metrics is crucial to enable investors to make informed decisions about their investment. By addressing these areas, companies can increase their chances of a successful IPO,” said the report.