Not Dream11 or Zomato. This was FY24’s most profitable unicorn

India’s leading startups are cutting losses even at the cost of growth, as late-stage private capital funding continues to be moderate.The long dry spell in late-stage funding means shortening of the runway for many loss-making unicorns. That has forced them to bring down losses. Although venture capital funding increased from $9.6bn in 2023 to $13.7bn in 2024, much of the funding activity is concentrated in the early and mid-stages. Late-stage funding, which was already low, further decreased by 20%, according to a Bain & Company report.For some other unicorns, the driving force behind loss reduction was not a capital crunch. It was rather a conscious choice, as they looked to strengthen their financial fundamentals ahead of a possible public listing. As many as 13 startups went public in 2024 against five in 2023. The trend would continue through 2025.Here are the key highlights from the ET Prime Unicorn 100.Barely a quarter of Indian unicorns are profitable. Out of 90 unicorns whose FY24 financials are available, 22 have reported profits for FY24. Out of 83, 20 were profitable in FY23. The percentage of profitable unicorns remains flat.A dozen others are close to profitability. Some of them reported profits in the previous years but made marginal losses during FY24.The financials of a dozen unicorns that are domiciled outside India are not immediately available. Four India-domiciled unicorns haven’t filed their FY24 financials.Factoring in all these, one could assume around 40% of the Indian unicorns are stable in terms of their financials. This would mean, from the previous year, there isn’t any improvement in this score.Quite unprecedentedly, a fifth of Indian unicorns reported a decline in revenue in FY24. Well-funded leading startups used to show growth despite mounting losses in the previous years. But that trend is changing among a section of unicorns at least. As many as 19 unicorns saw the size of their business shrinking.Collectively, Indian unicorns recorded 21% growth in their combined revenue at ₹3.84 lakh crore during FY24. The year-on-year growth rate was 35% for FY23. The revenue growth has significantly slowed in FY24.Their combined losses shrunk from ₹60,932 crore in FY23 to ₹39,361 crore in FY24, a drop of 35%. They had managed to bring down losses by 25% in FY23. There is a sharper drop in losses.Profitable unicornsOfBusiness continues to be the most profitable unicorn in the country. The B2B (business to business) marketplace for industrial materials made profits for the sixth consecutive year. Five of the 22 profitable unicorns are publicly listed. At least four are likely to go public this year.A third of the profitable unicorns (eight) are consumer-facing fintech companies operating in financial services, insurance and stock trading, while four are fintech solutions providers. They facilitate banking operations, payments and credit score rating, etc.Two-thirds of the profitable unicorns are consumer internet startups focused on B2B commerce, food delivery, hotel aggregation, e-commerce and various financial services. The balance third are enterprise IT companies providing tech solutions. Nearly profitableThere are 13 companies that have profits in their sights. Some like publicly listed Delhivery, for instance, have reported profits for FY25. The IPO-bound Urban Company, too, reported profits. Most of these unicorns show strong revenue growth and negligible loss margins. IPO-bound Lenskart and Fractal, both which reported profit in the previous fiscal, showed small losses in FY24 while growing steadily in terms of revenues. Getting smaller or healthier?As many as 19 unicorns saw their revenues decline in FY24. Some of them have stabilised their business and reported profits. For instance, Oyo’s revenue marginally decreased but it reported profits for the first time. Consistently profitable CitiusTech also saw a negligible drop in revenues, but its profits grew 7x. Billdesk’s revenues saw a similar decline, but profits remained steady.Most of the unicorns whose revenues decreased managed to bring down their losses. However, they are not close to profitability yet. Some have seen massive reduction in the size of their businesses. For instance, Dealshare’s revenues reduced to a fourth of what it had reported the previous year. PharmEasy, which struggled with debts, registered a 15% drop in revenues. Its losses halved but still remained significant at around ₹2,500 crore. Unacademy, which was in the news for sale talks, saw a 5% decrease in revenues but brought down losses to a third. Low cash burnPartly a result of low availability of funds, cash burn has significantly come down among Indian unicorns. Only four of them showed more losses than their revenues or spent more than two rupees to earn a rupee. A steep cut in expenses over the years is evident. During the bullish year of FY22, at least nine unicorns spend 3x to 9x their revenue. After the funding slowdown hit in FY23, only eight of them spent 2x their revenue. This has further come down in FY24.At a crossroadsFor late-stage startups, which have raised hundreds of millions of venture capital and are 10 years or older in most cases, the past three years have been a testing period. Private capital funding has come down and the public market has been selective. Some of them have shrunk and others have seen slow growth. In the absence of equity funding, some of the unicorns, faced with accumulating losses and slowing or declining revenue, may explore other strategic options including sale. The unicorn landscape might witness some strategic actions in the near term.