Startups more than double cash burn to $5 bn in FY22

The study captured the financials of the 50 most-funded tech and tech-oriented ventures in this third part of a running series. But it excludes large startups such as Byju’s, which are still to file their financials for FY22 with the Registrar of Companies.

The study showed that these startups more than doubled their cash burn in FY22 to ₹ 30,304 crore (about $5 billion at the prevailing exchange rates) from ₹14,386 crore the year before.

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The figure excludes fintech unicorn BharatPe’s expenses due to re-evaluation of preference shares. This takes the total cash burn by these startups in the three years through March 2022 to ₹63,542 crore to generate aggregate revenue of about ₹1.62 trillion, the study showed.

The burn rate captures how a startup spends venture capital funds to finance overheads before generating positive cash flow from operations.

However, for ease of understanding, operating loss was considered as a proxy for cash burn. Since most startups don’t have access to credit due to lack of collateral and other factors, operating loss is financed from the capital raised from venture investors.

Of the 50 startups, unicorns such as food and grocery delivery startups Swiggy and BigBasket, social media company ShareChat, edtech unicorn Unacademy, online drug retailer PharmEasy, and fintech startups PhonePe, Cred and BharatPe, were among the top 10 cash guzzlers. Hospitality firm Oyo and Dailyhunt parent VerSe Innovation were also in the top 10.

These companies spent at least ₹1 crore every day in FY22, bringing their monthly cash burn rate to at least ₹30 crore. The list also includes startups such as quick commerce firm Zepto, DealShare, Rebel Foods, and edtech firms Vedantu and upGrad.

The study also ranked startups on the basis of expenses to generate a specified amount of revenue.

Of the 50 startups, ShareChat, Hike, Vedantu, Spinny, Open, Unacademy, Cred, Rapido, Zepto, VerSe Innovation and CureFit spent more than two times of what they generated in revenue.

The list of top-funded startups whose burn rate increased at a faster pace than revenue growth in FY22 was topped by BigBasket, now owned by the Tata group. The list also includes auto marketplace Spinny, fitness chain CureFit, Unacademy, upGrad, Good Glamm, Licious, Snapdeal, Swiggy and Urban Company.

Meanwhile, a few startups ranked as outliers as they were able to trim expenses relative to revenues. Startups such as Oyo, Zeta, KreditBee, Paytm, and Hike were able to reduce their burn in FY22.

Zetwerk, Glance, Pepperfry, XpressBees also reduced their burn rates and reported positive Ebitda.

Pine Labs, Citius Healthcare, Razorpay, Groww, Infra.market and OfBusiness improved their Ebitda, which stayed positive.

Dream11, Ecom Express and Lenskart maintained positive Ebitda though it declined during the last financial year.