Startups increase their cash outflow to $5 billion in FY22

According to a VC Circle analysis, Startups or entrepreneurs increase their cash outflow in the financial and edtech sectors as well as food and grocery delivery services.

BENGALURU: According to a VCCircle report, India’s top technology startups burned through billions of dollars received from alternative investment firms for quick expansion in the year to March 2022, with food and grocery delivery services, as well as fintech and edtech enterprises, burning the most money.

In this third installment of a continuing series, the study summarized the financial data of the 50 tech and tech-related companies with the highest funding. However, it does not include significant companies like Byju’s, whose financials for FY22 have not yet been submitted to the Registrar of Companies.

According to the research, these firms more than doubled their cash burn in FY22 from 14,386 crores to 30,304 crores, or $5 billion at the current currency rates.

The amount doesn’t include expenses related to the revaluation of preference shares incurred by fintech upstart BharatPe. As a result, the analysis found that these firms spent a total of 63,542 crores in cash over the three years leading up to March 2022 in order to make an estimated 1.62 trillion rupees in revenue.

The burn rate reflects how much venture capital a startup uses to pay for overheads prior to experiencing a positive cash flow from operations.

However, operating loss was used as a stand-in for cash burn to make things easier to understand. Due to a lack of collateral and other issues, the majority of startups are unable to obtain credit, so operating losses are covered by funds from venture capitalists.

Among the top 10 money-suckers among the 50 startups were unicorns including the food and grocery delivery businesses Swiggy and BigBasket, the social media company ShareChat, the edtech unicorn Unacademy, the online pharmacy shop PharmEasy, and the financial startups PhonePe, Cred, and BharatPe. The top 10 also included the hospitality company Oyo and Dailyhunt parent VerSe Innovation.

In FY22, these businesses spent at least Rs. 1 crore each day, which increased their cash burn rate to at least Rs. 30 crores per month. Along with other startups, the list also features edtech companies Vedantu and upGrad, Zepto, DealShare, Rebel Foods, and fast commerce provider Zepto.

A few firms, however, stood out because they were able to reduce costs in relation to revenues. In FY22, startups like Oyo, Zeta, KreditBee, Paytm, and Hike were able to cut back on their burn.

In addition to lowering their burn rates, Zetwerk, Glance, Pepperfry, and XpressBees all reported positive Ebitda.

Improved Ebitda was reported by Pine Labs, Citius Healthcare, Razorpay, Groww, Infra. market, and OfBusiness.

The Ebitda for Dream11, Ecom Express, and Lenskart remained positive even though it fell over the previous fiscal year.