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1、Road to Hyperscaling in IndiaDecoding the good-to-great journey of Indias late-stage startupsMarch 2023Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pioneer in business strategy whe
2、n it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders-empowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams bring deep industry and functio
3、nal expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and throughout all levels of th
4、e client organization,fuelled by the goal of helping our clients thrive and enabling them to make the world a better The Indus Entrepreneurs(TiE)is a global organization fostering entrepreneurship through mentoring,networking and education.Founded in 1992 in Silicon Valley by a group of successful e
5、ntrepreneurs,corporate executives,and senior professionals.There are currently 15,000 members,including over 3000 charter members,spread across a vast network of 61 Chapters in 14 countries.TiE Delhi-NCR is among the most active and vibrant chapters across the vast TiE network.In the last two decade
6、s,it has continuously taken the lead in creating an increasingly positive ecosystem for entrepreneurs and investors and has emerged as one of the biggest platforms supporting entrepreneurship.delhi.tie.org/Times Bridge is the global investments and venture arm of The Times Group,Indias oldest and la
7、rgest media and digital company,whose mission is to ally with the worlds most purposeful companies to enable their entry,scale,and impact across India.Its current portfolio includes Airbnb,Canva,Coursera,Girl Effect,Headspace,Houzz,Luminary,Malaria No More,MUBI,Smule,Stack Overflow,Uber,and Wattpad,
8、among others.By providing unmatched market leadership to its select global partners,Times Bridge accelerates growth and immersion across the Indian subcontinent for leaders and companies who believe in winning in and learning from I ForewordThe startup ecosystem in India has come a long way.As someo
9、ne who took the plunge over two decades ago,I am proud to see entrepreneurship celebrated like never before.I recall how challenging it was back then to take the road less travelled,to raise funds to build and fuel growth with nascent digital penetration and a deep-rooted fear of online payments.Don
10、t get me wrong,entrepreneurship is not for the faint-hearted even today,but a lot has changed,and thankfully,for the better.Building a solid,scaled business may take a long time in India.Still,the ecosystem now is a lot more trusting with financial and non-financial support,allowing late-stage start
11、ups to accelerate at a pace that was unimaginable two decades back.There is much to learn from the journeys of those who managed to hyper-scale smartly,riding the macro tailwinds.One must tread the path carefully,though,since for every success story,there are more who tried to move too fast too soon
12、 and are now examples of what not to do.In 2022,the winds changed course,causing discomfort to the investor community and the startups.This weather is also unprecedented for many unicorns and soonicorns,who have risen in the last 5-10 years.Having seen at least two major economic crisis cycles,I adv
13、ise founders to be extremely frugal,to celebrate small successes,and to focus on the basics by relying on unaided comebacks and actual network effects rather than growth at all costs.Waves like this are an unparalleled opportunity for well-run businesses to consolidate their lead and emerge stronger
14、 than ever.Deep KalraFounder and Chairman,MakeMyTrip,Board Member and Mentor,TIE Delhi-NCR6ROAD TO HYPERSCALING IN INDIAExecutive SUMMARYThe entrepreneurship and startup landscape in India has witnessed enormous growth over the last few years,transforming India into the third largest startup ecosyst
15、em in the world,just behind USA and China.106 unicorns in India by 2022:an indicator for Indias growing startup maturity,though the overall impact is far wider and deeper65%share of this funding attracted by top 3 sectors:Fintech,E-Commerce and Enterprise Tech40,000 active startups in 2022,indicatin
16、g rising aspirations among Indian entrepreneurs130Bn raised since 2014 by Indian start-ups;growing faster than China 50%reduction in time to reach unicorn status,indicating faster scaling and stronger belief in future growth potentialContext:Indias growing startup ecosystem7ROAD TO HYPERSCALING IN I
17、NDIAJourney to successful hyperscalingWhile the conducive macro-economic factors,investing and policy environment have acted as key enablers,some startups have made choices that have helped them win in this market and successfully hyperscale,while others have withered away.Through our analysis we un
18、derstood 8 key unlock themes that have helped late stage startups in their hyperscaling journey.They expand the market and bring in new usersThey solve for unit economics earlyThey build the right teamsThey innovate around technology scalabilityThey deepen their moats for customer stickinessThey lev
19、erage capital optimallyThey scale the startup cultureThey unlock the full potential of ecosystem00608The path forwardThe global macro-economic headwinds have also impacted the Indian start-up ecosystem,reflected by 40%reduction in funding in FY2022.While investors become measured in their
20、 valuations,many large funds are also sitting on large amount of unallocated dry powder.Startups need to navigate the current volatile environment The gap between well-run startups with strong fundamentals vs.others will increase in this period.The founders and leaders need to ensure survival as wel
21、l as keep one eye on the future.While managing burn will be critical on one end,one must capture opportunities smartly to invest and grow in the long term.Table of Contents010203CONTEXT OF ECOSYSTEM1019#2053#5461#ROAD TO SUCCESSFUL HYPERSCALINGTHE PATH FORWARD01CONTEXT OF ECOSYSTEM10ROAD TO HYPERSCA
22、LING IN INDIACONTEXT OF ECOSYSTEM1112ROAD TO HYPERSCALING IN INDIACumulative number of Indian startups launchedThe startup ecosystem in India has seen massive growthover the years,producing 58,000 startups2005200620072008200920000022Source:Inc42 State Of I
23、ndian Startup Ecosystem Report 2022of 58,000 startups launched are active 40,0003,5004,5005,5006,5008,50012,50016,50021,50024,50029,00037,00042,00046,70050,90054,00055,65057,08657,73813CONTEXT OF ECOSYSTEMSource:Morgan Stanley,Uplers,ADB The Startup Environment and Funding Activity in India June 202
24、0 ReportA confluence of factors have contributed to the proliferation of startups in India over the past decadesRising digital adoption:900Mn users expected by 2025Telco price wars,commoditization of mobile data are leading to high smartphone and internet penetration:expected 13.5%CAGR in smartphone
25、 users from 2020 to 2025Pandemic aided acceleration and explosion of UPI by 2.6XPandemic accelerated new digital behaviors;UPI adoption also grew 2.6X between April 2020 and April 2021 within a year,benefiting Fintech and E-Commerce sectors especiallyThe age demographic sweet-spot driving new digita
26、l behaviors65%of population below 35 years,with median age of 28.4 years(2023);Also producing 1Mn graduates a yearConducive public policy Digital India program,Startup India initiative(2016),Multiple incubation programs,Tax benefits,investments to support infrastructure for startup Expanding middle
27、class and rising urbanization Resulting in larger demand basket-Middle class will account for 46%of all Indian households in 2025(vs 37%in 2018)14ROAD TO HYPERSCALING IN INDIACumulatively,Indian startups have raised over$130Bn since 2014,growing faster than China1,5191,5849538128339991,0499863772014
28、2000212022Note:Funding amount numbers are rounded off Source:Inc42,Traxcn,other secondary sourcesFunding raised peaked in 2021 and dropped by$17Bn in 2022,still more than twice the funds raised in 2019 and 2020Startup funding in India has increased considerably over the last de
29、cadeDeal countFunding amount(in$Bn)raised between 2014 and 2022Over$130Bn$837BnTotal funding(2014 to 2022)China73%Internet penetration(2021)$130BnIndia61%846Mn1.03BnTotal internet users(2021)6955$1.35TnUSA90%302Mn15CONTEXT OF ECOSYSTEMFintech,E-Commerce and Enterprise Tech attracted most
30、fundingNote:Percentages may not add up to 100%due to rounding Source:Inc42 State Of Indian Startup Ecosystem Report 20222000202021202225%MediaEnterprise TechOthersFintechE-CommerceEdtechDeeptechConsumer ServicesWhile Fintech,E-Commerce and Enterprise Tech sectors have seen 55%f
31、unding share in India over this period;other sectors have also seen greater traction in the recent years 77%22%37%11%11%5%2%13%6%4%4%4%1%1%1%1%1%2%2%1%1%2%3%12%12%14%10%5%20%40%32%7%7%7%26%24%9%16%28%22%28%16%25%9%9%8%18%3%4%14%12%10%10%17%9%11%19%6%8%6%7%11%16%21%16%18%8%6%10%7%8%Startup funding di
32、stribution across sectors in India from ROAD TO HYPERSCALING IN INDIAAmong these startups,106 successfully turned into unicorns,making India#3 country with most unicorns today Up to 20002020212022Total#of Indian unicorns minted every year#of unicorns as of 2022new un
33、icorns in 2021 vs past years63306618174106IndiaChinaUSA4XSource:Inc42 State Of Indian Startup Ecosystem Report 2022,Traxcn,other secondary sources17CONTEXT OF ECOSYSTEMNearly 60%of the unicorns and soonicorns are from Enterprise Tech,Fintech and E-Commerce,in line with the funding trends1
34、.From Adtech,Healthtech,Proptech,Media,Gaming,Aggregator-Consumer Brands,D2C-Personal Care,Manufacturing,Cleantech,Telco,Interior Design,Content-Lockscreen 2.From Adtech,Proptech,Media,Manufacturing,Interior DesignSource:Pitchbook,Crunchbase,Inc42,Iron Pillar,BCG AnalysisEnterprise TechFintechE-Comm
35、erceLogisticsMarketplaceEdtechFoodtechHealthtechAdtechHealthtechOthers1%of next 100 startups(soonicorns)by sector as estimated in November 2022EdtechFintechEnterprise TechE-CommerceHealthtechMarketplaceLogisticsGamingAgritechFoodtechOthers2#of Indian unicorns by sector as of November 2022Enterprise
36、Tech has added highest number of startups and unicorns mainly due to digital adoption brought about across sectors by the Covid-19 crisisRise of Fintech can be attributed to rise in digital infrastructure(UPI,Aadhaar,etc.),mobile banking,payment gateway services,mobile wallets,paperless lending,etcU
37、ptick in E-Commerce can be attributed to rise in digital payments and new online behaviours post Covid-19 crisis67%55%18ROAD TO HYPERSCALING IN INDIAReaching unicorn status has accelerated over the past years,specially for Foodtech,Marketplaces and Fintech1.Excludes industries with n=$1Bn;soonicorns
38、 are valued at$200Mn to 90%share)in digital insurance marketplace in IndiaTHE RESULTSource:Press releases,Company reports,founder/investor interviews06 Alok Bansal Co-founder and Exec Vice ChairmanAt one point,when relatively cheaper capital was available in the India market actively searching for n
39、ewer challengers to fund,we consciously worked on ensuring that the right investors are on our side than anyone else.36ROAD TO HYPERSCALING IN INDIAMeesho pivoted into marketplace model at opportune time,leveraging capital as an acceleratorSource:Press releases,Company reports,founder/investor inter
40、views07 Sanjeev Barnwal Founder and CTOAs a founder,you must get a sense of the market and capitalize big and small opportunities at the right time.You,as a leader,need to ensure you get what you want out of these bets and at the same time,minimize the cost of experimentation.Mindset of a founder ne
41、eds to also change very quickly to align with evolving market realities.Marketplace model currently accounts for 80%of Meeshos businessTHE RESULTIn early years,Meesho saw huge success via the resellermodel that managed to bring in high levels of demandat a significantly lower customer acquisition co
42、stWhile Meesho started as a social commerce company,the E-commerce adoption tailwinds from COVID and affordable(telco)data saw many consumers become more comfortable with online shopping.Hence,many consumers(including resellers)started buying directly from Meesho for their own needsMeesho actively i
43、nvested into this opportunity and built a marketplace connecting sellers and consumers(in addition to the WhatsApp led reselling).Over 1.5 years,this has been a very successful strategy for Meesho,unlocking a new wave of growth37ROAD TO SUCCESSFUL HYPERSCALING37ROAD TO SUCCESSFUL HYPERSCALING38ROAD
44、TO HYPERSCALING IN INDIAIndian unicorns have shaped and positioned themselves favorably to attract good talentIndian unicorns have relied on distributed leadership to scale their multi-brand businessesSource:Interviews,BCG experienceHow have Indian unicorns set up organization for successful scaling
45、?0809They build the right teamsLeveraged distributed leadership model to scale rapidly in India&globallyOYOPushed themselves to become the best option to attract talent in the marketZeptoRebranded the industry and career paths to attract skilled talent neededDelhiveryBy shaping the organization to a
46、ttract the people they needBy decentralizing power through organization design and people39ROAD TO SUCCESSFUL HYPERSCALINGZepto designed compelling employee value proposition to become the top destination for talentSource:Press releases,Company reports,founder/investor interviews08 Aadit Palicha Co-
47、Founder and CEOContrary to the approach many start-ups take,Zepto did not start with attracting pure hustlers.With a complex product that needed to scale quickly,we needed people that had both a zero-to-one mindset and deep expertise in areas like supply chain.Just 1 year after launch,Zepto has mana
48、ged to attract many senior executives fromwell-known companiesTHE RESULTZepto was relatively a late entrant in the ecommerce market,Zepto needed to move fast and create scale quickly,since quick commerce could survive only with unprecedented levels of asset utilization and turnaround timeWith just a
49、 sliver of such talent out there,Zepto pushed hard to become the best option for such entrepreneurs.They developed career pathways that were more accelerated than any other competitors,and aggressively pushed the visibility and reputation of that to startups and mature companies that held such talen
50、t40ROAD TO HYPERSCALING IN INDIAOYOs distributed leadership model enabled a pivotal shift in their scaling strategyEmbracing distributed leadership helped Oyo stay nimble and responsive in a fast-changing worldEarly on,Oyo was able to build a strong in-house extended founding team and leaders with m
51、utual trust.Be it the shifts in business models,or tapping into new geo markets,Oyo counted on these leaders to step in and drive execution end to endHaving a clear where the buck stops for different parts of business,allowed founders to focus only on the areas where it was essential to step inThe s
52、peed with which OYO achieves consensus,changes gears and rallies the entire organization to deliver on new goals,has been a significant enabler in this execution heavy businessRapidly scaled in India since inception,expanded to other marketsSequentially improved unit economics and delivered two EBIT
53、DA positive quarters in FY23THE RESULTSource:Press releases,Company reports,founder/investor interviews09 Ritesh Agarwal Co-Founder and CEOThe biggest leverage I can get out of the senior team we have put together is to let them run their own domains of expertise.41ROAD TO SUCCESSFUL HYPERSCALING41R
54、OAD TO SUCCESSFUL HYPERSCALING42ROAD TO HYPERSCALING IN INDIASource:Interviews,BCG experienceHow have Indian unicorns set up organization for successful scaling?They scale the startup cultureBy instating mini-founders that champion culture Created mini-founder positions to lead separate businessesPo
55、licybazaar10Indian unicorns have created a host of mini-founders to take charge and thereby cultivating entrepreneurial mindset By institutionalizing experimentation and innovationEnsures innovation through culture and top-down focusPepperfryBuilt innovation hubs and fosters innovative mindsetUber11
56、Indian unicorns have continually evolved their moats through inculcating innovation across the organizationBy ensuring right KPIs are selected to evaluate performanceMonitors different KPIs for different segments depending on the maturity and stage in their hyperscaling journeyDelhivery12Indian unic
57、orns have built the right performance culture to drive discipline and results43ROAD TO SUCCESSFUL HYPERSCALINGPolicyBazaar created mini-founders within to take end to end charge of parts of the businessAs businesses mature,it becomes increasingly difficult to preserve the entrepreneurial spirit from
58、 their early stages.PolicyBazaar started its operations in 2008 and was a well-established business in 2015 when its founders launched PaisaBazaar-a digital consumer credit marketplaceThe leadership knew that both the businesses were at different levels of maturity with different market dynamics,and
59、 hence decided to keep PaisaBazaar and PolicyBazaar independentThese separate businesses own separate P&L and mini-founders are evaluated separately for the performance of each verticalThis helped nurture and protect the startup spirit in new businesses even as the older businesses maturedPaisaBazaa
60、r became Indias largest digital consumer credit marketplace with 50%market shareTHE RESULTSource:Press releases,Company reports,founder/investor interviews10 Alok Bansal Co-founder and Exec Vice ChairmanFinding and nurturing mini-founders has been a priority to extend a culture of entrepreneurship a
61、s well as to create leverage for the founders.Once we are aligned at the core ethos,and on the boundary conditions for specific businesses,we empower them to make decisions,run businesses like their own.44ROAD TO HYPERSCALING IN INDIAPepperfry ensures steady stream of innovation through right cultur
62、e and enabling processesSteady stream of experiments at any one time:25+micro-experiments across functions3-4 large experiments led by tiger teams and focused on by founderTHE RESULTPepperfrys founder makes a conscious effort to not know what the micro-experiments conducted within functions are abou
63、t;instead,the founder is interested in whether each function is indeed experimenting at all,and the right KPIs are put in place to ensure such culture is encouragedOnce micro-experiments become larger,tiger teams (i.e.high-performing cross-functional teams)are set up,and regular updates to the found
64、er begin.These larger experiments receive their due rewards and recognition,and in turn incentivize each function to conduct the right types of micro-experiments regularlySource:Press releases,Company reports,founder/investor interviews11 Ambareesh Murty Co-Founder and CEOAt such a scale,its down to
65、 making innovation a culture in every single function;I dont need to know what experiments are about,but I need to know that they are happening.45ROAD TO SUCCESSFUL HYPERSCALING45ROAD TO SUCCESSFUL HYPERSCALING46ROAD TO HYPERSCALING IN INDIAScalable technology sets up startups for future successHow
66、have unicorns innovated around technology scalability?They innovate around tech scalabilityBuilds full-tech platforms globally that can be scaled locally to cater to specific needsFocused on platform scalability to drive agility and responsivenessUber1mgBy designing a platform and not a product from
67、 the startBy constantly innovating and evolving tech infrastructure1314Indian unicorns have built platforms acting as marketplacesIndian unicorns have allocated dedicated resources to innovate and build scalabilitySource:Press search,Interviews,BCG experienceProvides flexibility in early stages whil
68、e looking for product market fit before committing to scaling a particular productAbility to serve increasing demand in the future without jeopardizing customer experience and incurring significant costs47ROAD TO SUCCESSFUL HYPERSCALINGUbers strong global tech platform provides the flexibility to sc
69、ale local operationsUnderlying Ubers global success is its tech enabling it to offer the right pricing to consumers while considering supply and demand factors.When it launched in India,Uber started with a simpler,low-cost product offering with its Hatchback service to reduce supply barriers.Eventua
70、lly,it customized its product offering to meet local demands,such as adding a Cash payment methodAs Uber grew in India,its platform was able to support its expansion to more cities.Its unified tech stack provided the stability and scalability Uber needed to grow.Its technology is continuously evolvi
71、ng as learnings from one city are fed back to the system to run more experiments.With Ubers global scale,teams have one less worry about potential issues with its servers or platformsUber India is also a unique market for the company as they build full-tech solutions locally such as Uber Bus,Uber Re
72、ntals that are globally scalableSource:Press releases,Company reports,founder/investor interviews13 Prabhjeet Singh President,India and South AsiaWe dont build tech solutions that are not scalable In India,we have two big tech centres to build tech that gets deployed to other markets globally.48ROAD
73、 TO HYPERSCALING IN INDIA1mg improved the tech infrastructure to drive agility and responsiveness for businessSource:Press releases,Company reports,founder/investor interviews141mg adapted its tech infrastructure according to its scaling stage.They began with a monolithic infrastructure and eventual
74、ly evolved into a microservices architecture to improve their speed of deliveryThey hosted their platform via a private data center but faced DDOS attacks.Eventually,1mg shifted to cloud infrastructure given reliability and robustness offered by cloud.While moving to cloud was pricier,it provided mo
75、re flexibility and speed to scale their services1mg also leverages emerging technologies like AI and MLto deliver superior healthcare-related services at scale.1mg has a dedicated platform team to continuously identify new technologies to help build the scalability of its platformTech Infra Evolutio
76、nEvolved to Cloud-first mindsetFrom Monolithic components to true microservices based,scalable architecture Prashant Tandon,CEO and Co-FounderAt every stage in the scale,the challenges are very different.Evolving the tech infra at the right time is key-knowing when to move from a quick product that
77、demonstrates PMF,and when to transition the architecture for scalability and stability with formal processes is critical.In our case,it gave us a certain balance of speed of development,scalability,stability,that helped in building product offerings much much faster.49ROAD TO SUCCESSFUL HYPERSCALING
78、49ROAD TO SUCCESSFUL HYPERSCALING50ROAD TO HYPERSCALING IN INDIAHow have Indian unicorns realized the potential of partnerships?Partnerships is one of the most powerful tools for startups to scaleCollaborated with partners by building their offerings around enabling partnersIcertisLeveraged partners
79、 to reach the right set of customersUberBuilt successful partnerships with franchisees while retaining control over value chainPepperfryBy being partner-centric in scaling journeyBy balancing control and empowerment creatively151657%of businesses use partnerships to gain new customers Up to 70%of bu
80、siness partnerships fail despite the potential impactSource:Interviews,BCG experienceTo find the next wave of customersAcquire scalable technologyOffer full-stack solution quicklyExpand operating model quicklyBuild up reputation51ROAD TO SUCCESSFUL HYPERSCALINGIcertis saw partners as key to scaling,
81、and built product and organization centered around partnershipsSource:Press releases,Company reports,founder/investor interviews15In its initial stage,Icertis was best placed to work with its customers on implementation,as it had best knowledge of product,CLM and how customers work.When Icertis scal
82、ed to 500 implementations,partnerships became key not just for generating leads,but also for selling betterToday,Independent Software Vendors(ISVs)integrate Icertiss CLM with their core offerings thereby bringing in ready customers to Icertis.Such partnerships are attractive to partners as they help
83、 strengthen their core offering and bring recurring profit-sharing arrangements Icertis has a CXO oversee its partnership program,including building platforms to work well with partner products,e.g.,tools for configuring things more easily,applications to go through SaaSSAPSalesforceMicrosoftLeading
84、 ISV partners Monish Darda Co-founder and CTOStrategic partnerships with top-tier software and professional services players were key to hyperscaling.Those relationships enabled us to leverage well-established B2B sales ecosystems quickly and,at the same time,add immense value to our partners portfo
85、lios of offerings to help joint customers unlock the insights of contract intelligence and uncover hidden revenue,savings and risks.52ROAD TO HYPERSCALING IN INDIAUber partnered with Meta to accelerate access to new customer segmentsSource:Press releases,Company reports,founder/investor interviews15
86、In Tier 2+cities,smartphone penetration is lower,and customers tend to be more selective with the apps on their phone-WhatsApp being one of the popular apps used.By enabling its ride-hailing on WhatsApp,Uber was able to penetrate these small townsFor example,users booking through WhatsApp could prov
87、ide their pick-up and drop-off locations and would get the ETA of the driver and other informationBeyond the user experience,Uber also ran promotions to entice users to try the new platform(such as 50%off on your first 3 Uber rides via WhatsApp)33%of inbounds during the pilot in Lucknow were receive
88、d from new users,showing potential for new customer acquisitions via WhatsAppTHE RESULT Prabhjeet Singh President,India and South AsiaThe way Tier 2 and 3 cities experience digital services is different from larger cities so the real competition is which apps are downloaded.Partnering with WhatsApp
89、gave us access to a platform everyone had.53ROAD TO SUCCESSFUL HYPERSCALINGPepperfry empowered franchise owners to be entrepreneurs,while keeping control on key parts of value chainOne of the key differentiators of Pepperfry has been its omnichannel strategy,and the reason it could scale its offline
90、 retail stores Pepperfry studios so quickly was through its successful partnership model with franchisees.The model was designed to treat franchisees as entrepreneurs who run a profitable business,fully empowered to control customer and post-sales interactionsPepperfry however,retained control in ke
91、y upstream and downstream components of the value chain(i.e.,what products get sold,and how products are delivered),through the supply chain it built,which is the key disruptor to the unorganized and hyperlocal nature of the marketNew Pepperfry Accelerator ProgramCut CAPEX required from franchisees
92、by 1/3+200 studios in one year,by adding one entrepreneur a day for rest of the yearTHE RESULTSource:Press releases,Company reports,founder/investor interviews16 Ambareesh Murty Co-Founder and CEOOur franchise model is a like virtual catalogue being sold in the physical world by a partner,and we con
93、trol the key parts while empowering them as mini entrepreneurs.THE PATH FORWARD54ROAD TO HYPERSCALING IN INDIA0355THE PATH FORWARD56ROAD TO HYPERSCALING IN INDIAIndias startup ecosystem at a confluence:Funding slowdown paired with a large amount of unallocated dry powderFunding amount(in$Bn)Aligned
94、with global trends,funding raised by India startups hit a two-year low in Q3 2022However,India-focused funds are sitting on a highest-ever unallocated capitalnew funds in 2022126Q1 2021Q1 2022Q2 2021Q2 2022Q3 2021Q3 2022Q4 2021Q4 202220002944451523Source:C
95、AIA Association,Silicon Valley Bank report,Inc42 report,Press releases,Investor interviews57THE PATH FORWARDInvestors are taking a wait and see approach on late-stage startups:Expect fair valuation with a keen eye on unit marginsDry powder will continue to be mostly deployed to early-stage startups
96、in 2023Investors will be patient with growth-and late-stage startups,and double down on profitability metricsEarly-stage startupsLeast affected by changes in public market valuation Investors still making bets,especially in emerging sectorsExpect lower value to revenue multiple,fueled by public mark
97、et corrections and macro factorsValuation ambition mismatch:Need to be wary of dilution of equity in the current market condition Growth-stage startupsLate-stage startupsAngelSeedEarly StageLater stage4,0394,6629,7679,3107,4034,8442,5372,26297536246911,304293831,794263881,110202911,191212
98、9360820137792Q1 2021Q1 2022Q2 2021Q2 2022Q3 2021Q3 2022Q4 2021Q4 2022Source:CAIA Association,Silicon Valley Bank report,Inc42 report,Press releases,Investor interviews58ROAD TO HYPERSCALING IN INDIAIn this macro environment,essential to focus on the fundamentals to survive as well as drive long term
99、 growthImprove core metrics and celebrate small wins.Keep a sharp focus on the right metrics-Actual repeat or affirmation of repeat in the form of referrals,brand recall.Deep Kalra Founder,MakeMyTripLearn your own lessonsOne eye on the futureDrive frugal innovationsSharpen the value propContinuing t
100、o acquire customers at discount is not sustainable in long run.Scarcity of money is actually a positive;Startups become more resourceful and focus more on getting money from customers,and thereby scale more sustainably.Sanjeev Bikhchandani Co-founder,Info EdgeBegin with the principle of having custo
101、mer obsession.Not just meeting the stated needs but identifying all the problems in the journey and solving them.Ability to experiment,failing fast and moving with speed is key!Kumara Raghavan Head,Startups,AWS India Alok Mittal Cofounder and CEO,IndifiDeploy capital basis how aggressive you want to
102、 be and how far ahead of profitability curve you want to go.Some startups grew slowly initially and took 6-7 years to hyperscale as network effect kick in.In others,a lot of scale is driven by capital.One size does not fit all.59THE PATH FORWARDThe approach for hyperscaling in this market will depen
103、d on basic measures of unit economics and capitalizationPositiveUnit economicsLevel of capitalizationWell-fundedBuild and scale,tone down on raising capitalFocus on growing market share to generate economies of scale and consolidate lead over competitors.This is the best time to build your business
104、if you have sorted out your unit economics;the worst thing you can do is to want to keep to your old valuation because of ego and lose your market share.A leading Venture Capitalist in IndiaAs macro drivers in India remain strong,one should not compromise growth just to maintain valuation.Raise capi
105、tal at lower valuation or from alternate sources(e.g.Venture debt)UnclearRequire capitalClear path to profitability of the business will be key to extend life,to attract funds.Even large companies with questionable unit economics will struggle to raise capital in this environment.Focus on sharpening
106、 unit economics and accelerating path to profitability60ROAD TO HYPERSCALING IN INDIASustaining and hyperscaling in turbulent times:3 critical elementsHow to create space to grow in the current uncertain environment?Focus on organic growth metrics:Customer retention,Repurchases,Referrals,etc.Track a
107、nd celebrate small wins:KPI movements,milestones Maximize value from existing assets and partnerships Streamline operations:Optimize costs(core vs non-core)Retain quality talentMonitor key metrics on daily,weekly basis Extend the runway:Optimize spends by understanding liquidity outlookPreserve the
108、gas and reduce the burn rateCut the flab and not the muscleTighten norms for new investments/experimentations,raise bar on expected Return on InvestmentsSustain and accelerate growth:Drive organic growth by frugal innovationLookout for sharp pockets of opportunities Sharpen value proposition:Focus o
109、n customer needs to drive organic growth Raise capital(venture debt/equity)strategically:Prioritize value creation over current valuationStay nimbleExecution focus61THE PATH FORWARD61BCG+TIMES BRIDGE+TIE REPORT 202361THE PATH FORWARDA vote of thanks to the industry leaders,who shared their journeys
110、and perspectivesAlok Bansal PolicyBazaarAlok MittalIndifi Ambareesh MurtyPepperfryAmanpreet BajajAirbnb Aadit PalichaZepto Deep KalraMakeMyTripKumara RaghavanAWSMonish Dadra IcertisNiren ShahNorwest Venture Partners Sujeet KumarUdaanSahil BaruaDelhiverySanjeev BarnwalMeeshoInfoedge Sanjeev Bikhchand
111、aniAnjana SasidharanL Catterton Mohit BhatnagarSequoia India Prabhjeet SinghUber Prashant Tandon1mgRitesh AgarwalOYO.and several other emerging startup founders,senior executives and investors.The views shared are personal,and not attributable to the organizations represented above.About theAUTHORSS
112、IDHARTH MADAANPartnerMadaan.SBCG New Delhi NIMISHA JAINManaging Director and Senior PartnerJain.NBCG New Delhi RAJIV GUPTAManaging Director and Senior PartnerGupta.RBCG New Delhi SHALEEN SINHAManaging DirectorSinha.SBCG Mumbai GEETIKA DAYALExecutive Directorgeetikadelhi.tie.orgTiE Delhi-NCRABHINAV B
113、ANSALHead of STimes BridgeROHAN JOSEPHVice PHead of Global Investments and CorporateTimes BridgeNote tothe ReaderAcknowledgementsFor information or permission to reprint,please contact BCG at To find the latest BCG content and register to receive e-alerts on this topic or others,please visit .Follow
114、 Boston Consulting Group on Facebook,Instagram and Twitter.Boston Consulting Group 2023.All rights reserved.03/23This report is a joint initiative of Boston Consulting Group(BCG),The Indus Entrepreneurs(TiE)and Times Bridge.The authors thank and acknowledge the support provided by Joellyn Heng(Proje
115、ct Leader),Harsh Singh(Project Leader),Marc Tan(Consultant,BCG),Meriza Mamaril(Senior Associate,BCG),and Shreelakshmi VN(Senior Associate,BCG)in preparing this report.We would like to extend our gratitude to TiE member organizations,Times Bridge,industry stalwarts and leaders from the startup commun
116、ity for sharing their rich experiences with us and enabling others to learn from their knowledge.Their expertise has been invaluable to this exercise.We extend our sincere appreciation to Jasmin Pithawala,Komal Mohan and Sucheta Desai for marketing and communications support and to Saroj Singh,Sujatha Moraes,Abbasali Asamdi,Soumya Garg,Nitesh Tirkey and Farah Daruwalla for their extensive design and report production support.