The unicorn diet: How India's most valuable startups learned to live with less

Anomalies. That’s how venture capital (VC) investors describe the pandemic years and with very good reason. Funding for Indian startups surged dramatically—from about $22 billion in 2019 to over $45 billion in 2020 and more than $50 billion in 2021—positioning India as the world’s third-largest startup market.

The easy-money policies implemented by central banks across the globe to soften the blow of the Covid-19 pandemic lowered the friction for investors to support high-risk assets in search of substantial returns. Consequently, it became a buyer’s market, with companies securing the valuations they sought more often than not.

Consider this: Neobanking platform Open Financial Tech closed the year ended March 2022 (FY22) with an operational revenue of Rs 24 crore ($3 million). This was enough for it to secure a new funding round at a valuation of $1 billion, meaning its trailing revenue multiple was an astounding 333X. Bull market or not, this is an exceptionally high figure. For context, in typical bull market conditions, revenue multiples for growth-stage companies rarely exceed 30X.