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Are India’s Startups Running Out of Cash?



In the ever-evolving landscape of Indian startups, innovation and ambition have flourished, driving remarkable accomplishments in the past decade. A blend of factors, including technological accessibility, expanding consumer markets, and a fearless pursuit of the unknown, has contributed to this surge in entrepreneurial spirit. However, amid this culture of growth, a concerning trend has emerged – a trend characterized by substantial capital outflows that often surpass the revenues generated by these startups. In this article, we delve into the stories of five Indian startups that are burning through cash at an alarming rate, raising questions about the long-term sustainability of their ventures.

1. Flipkart: Navigating the E-commerce Battleground

India’s largest online retailer, Flipkart, is burning through money at an unprecedented pace. The staggering cash burn rate for the fiscal year ending in September 2022 was $3.7 billion, which made it the most among Indian firms. Investors are worried about the company’s impending financial collapse as a result of this worrying depletion.

Flipkart’s aggressive expansion plan is a significant driver fueling this cash fire. 

In July 2021, Flipkart raised US$ 3.6 billion. It made investments totaling US$ 1.42 billion in many of its expansions later in August 2021, right before the following holiday season.

A filing with the registrar of companies shows that US$ 589 million was invested in Flipkart India Private Limited, US$ 353 million in its B2C division Flipkart Internet Private Ltd, US$ 412 million more was invested in Instakart, the company’s logistics arm, and US$ 66 million more was invested in Myntra designs and Myntra Jabong India.

Along with growing its presence in previously untapped markets like food and fashion, Flipkart is also investing in cutting-edge technology like artificial intelligence (AI) and machine learning. Additionally, Flipkart must spend a lot of money on marketing, sales, and cashbacks in order to compete with Amazon and establish itself in new areas. Although this growth-oriented strategy might be successful in the short term, questions surround its long-term viability.

2. Byju’s: Edtech’s Trials and Tribulations

Byju’s, once hailed as India’s most valuable startup, now grapples with challenges that threaten its reputation and financial stability. A staggering cash burn rate of US$4.6 billion in the year ending March 2023 casts a shadow on its journey. 

A critical period of reflection for the $22 billion global edtech corporation occurred in 2022. Due to inconsistencies in its financial reporting, allegations of fraudulent course promotion, and large layoffs during this time, Byjus came under significant scrutiny. A staggering 19.8x increase from a loss of Rs 2.3 bn in FY20, the company reported a loss of Rs 45.9 bn for the fiscal year 2020–21. In other words, Byjus lost Rs. 120 million every day. The business raised an additional US$ 250 million from its current investors in October 2022.

However, because of the direction the business was taking, creditors requested a quicker payback of the portion of the loan out of concern for losses. Byjus renegotiated their debt agreement with these creditors in March 2023 and proposed a higher interest rate. However, the creditors demanded that Byjus make a prepayment of at least US$ 200 million. Byjus and Davidson Kempner completed a Rs 20 billion loan round in May 2023. But Byjus missed a loan payment in June 2023, further harming its reputation.

Despite receiving sizable funding, the company’s growing losses and loan repayment defaults have aroused concerns. This shows that even the most promising businesses can become trapped in a cycle of economic instability.

3. Ola: Riding on Innovation, Burning through Cash

Ola, a leader in the ride-hailing industry that transformed urban transportation, has experienced significant financial loss throughout its extraordinary journey. Ola’s quick expansion and entry into new verticals have put a pressure on company finances, with a $1.3 billion cash burn rate in the fiscal year ending March 2023.

The company’s cash burn rate has been impacted by significant marketing expenses, incentives for both consumers and drivers, and ambitious projects like Ola Electric. Ola Electric lost Rs 3.7 billion on its own in FY22.

Ola’s total operational revenue for FY22 was Rs 19.7 billion, while its total expenses came to Rs 33.6 billion. The loss amounted to Rs. 15.2 billion. Ola’s losses show the difficulties even creative disruptors confront in preserving financial stability, despite having raised billions from investors.

4. Zomato: Feeding India’s Appetite, at What Cost?

Zomato’s rise revolutionized food delivery in India, but this journey has been accompanied by financial turbulence. While the company’s gross revenue surged by nearly 69% to INR 70.8 billion in the fiscal year ending March 2023, its expenditures also experienced a steep rise.

64% of the operating revenue from the Rs 70.8 bn came from its platform services, which included meal delivery. This was a 32.8% increase over the previous year’s figure of Rs 341m. However, its B2B venture, HyperPure, had a 2.8x growth in revenue to Rs 15 billion. Additionally, Blinkit, the company’s rapid commerce division, brought in Rs 8,060 m in sales. To fully grasp the situation, we must also consider the costs.

Costs for advertising and promotion increased from Rs. 12.17 billion to Rs. 12.27 billion. Delivery and associated costs increased from the previous year’s Rs 18.14 bn to Rs 25.37 bn. The cost of purchasing materials increased from Rs. 5,25 billion to Rs. 13.95 billion.

In addition, other unrelated expenses increased from 10.16 billion to Rs 21.51 billion from the previous year. Employee perks are the sole expense that decreased in value from Rs 16,33 billion to Rs 14.65 billion. Taking everything into consideration, Zomato’s overall spending increased by more than 41%. With a $12 billion valuation, Zomato made its public market debut in July 2021. However, the business’s path as a public corporation has been chaotic, and in the last 21 months, its market capitalization has decreased by over 45%.

5. BharatPe: Balancing Aggregation and Losses

Tiger Global-funded BharatPe provides financing solutions and merchant aggregation services. Regarding BharatPe’s earnings, their POS machine sales increased from Rs 441 m in FY21 to Rs 1.26 bn in FY22.

 Between FY21 and FY22, commission income more than doubled, rising from Rs 720 m to Rs 1.52 bn. After being zero in FY21, revenue from loyalty points and other related services increased to Rs. 1.08 billion in FY22.

 It also received Rs 6,960 m in revenue from membership fees, advertisements, and other services. While its commissions and POS machine revenues have increased, it has also incurred considerable losses. BharatPe’s losses increased significantly from INR 27.7 billion to INR 82.8 billion in the fiscal year that ended in FY22. All things considered, BharatPe spent Rs 14.83 bn to make Rs 4.57 bn in FY22, as seen by the totals.

The necessity of financial sustainability was highlighted by the company’s rising expenses, which surpassed its earnings. When the company’s co-founder Ashneer Grover and his wife Madhuri Jain became involved in financial problems and claimed fraud, more legal disputes resulted, which made the challenges much more difficult.


The narratives of these five Indian startups shed light on the delicate balance between growth and financial sustainability. While prioritizing expansion and innovation is crucial for establishing a strong market presence, the importance of efficient resource management, ethical practices, and prudent financial decisions cannot be overlooked. The challenges faced by these startups serve as valuable lessons for aspiring entrepreneurs and investors alike. As India’s startup ecosystem continues to evolve, striking the right balance between aspiration and responsible growth remains the key to long-term success.


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