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Analysing Listed New Age Tech Companies - A Blog Series >>> New Age Tech Start-up - Down But Not Out (#1)
Analysing Listed New Age Tech Companies - A Blog Series >>> New Age Tech Start-up - Down But Not Out (#1)

February 28, 2023

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Analysing Listed New Age Tech Companies - A Blog Series (#1) 

Towards Sustainable and Profitable Business Growth 

Last year was the year when tech start-ups took the IPO route to raise money. Most of the IPOs received brilliant listings, but continuous losses and questionable business strategies reversed the gain and brought the stock prices down. Except for a handful, such Ease My Trip and Map My India, the downward trend was so severe that most first public offerings (IPOs) saw declines of more than 50%.

The tendency, however, appears to have shifted during the past several quarters, and these start-ups are increasingly concentrating on business expansion, profitability, and sustainability. This is made feasible by the varying business strategies that these startups embrace on a quarterly basis. Many of the tactics include:

Tapping the B2B market: Zomato is a perfect example of the same. Zomato’s Hyperpure business, which aims to provide fresh, hygienic, high-quality ingredients and supplies to restaurants, is reaping the benefits. It started at a slow pace, but now, as per the last quarter, it's growing at >150% y-o-y.

Mergers and Acquisitions:

  • Zomato again is a perfect example, whose much-criticised acquisition of BlinkIit (formerly Grofers) has now started showing growth in gross order value (GOV) in the last few quarters.
  • RateGain acquired the Silicon Valley AI platform "Adara" to drive optimal marketing campaigns targeted at the right audience.
  • Ease My trip acquired 55% of its value in Cheqin, where travellers can negotiate with hoteliers in real time. also acquired a 75% stake in the aviation asset financing and leasing company Nutana Aviation Capital, which offers charter solutions to customers both in India and abroad.

Focus on profitable businesses: Paytm's business portfolio is quite diverse, but for now they are focusing on payment volumes since that generates profits. Paytm's loan disbursement increased fourfold, with a twofold increase in total devices deployed.

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Moving near to customers: High last-mile delivery costs have always been a pain for e-commerce businesses, and hence, working on cost optimization, Nykaa is moving into state capitals with fulfilment centres that will help them lower last-mile delivery costs.

Collaboration: Policy Bazaar has now partnered with the Life Insurance Corporation of India (LIC) to offer a wide range of investment products to customers and expand reach in smaller cities.

Effective Customer Acquisition Model: Fino payments saw profitable growth after increasing their focus on customer acquisition by strengthening franchisees and emphasising partnerships.

The above business strategies are now visible in number as well. Profits for two-thirds of new-age listed start-ups increased by more than 50%, while loss-making listed start-ups observed a reduction in losses of >30%. This trend has been evident in recent quarters and is expected to continue in the coming quarters. But as we said, they are "down but not out."

In our next blog, we will look at some operational metrics that are supporting the growth of the new generation of tech start-ups.

 


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