Startups Experiences More Than Double Cash Burns In FY22: VCCircle The study further noted that certain companies experienced a significant increase in their cash burn during FY22, with the amount rising from 14,386 crore to 30,304 crore, equivalent to $5 billion at current exchange rates
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A VCCircle study report stated that Indian startups received billions of dollars from alternative investment firms for rapid expansion in the year ending March 2022, with food and grocery delivery, fintech, and edtech firms burning the most money, according to a VCCircle report.
Certain companies experienced a significant increase in their cash burn during FY22, with the amount rising from 14,386 crore to 30,304 crore, equivalent to $5 billion at current exchange rates. However, this figure does not include expenses related to preference shares revaluation incurred by BharatPe, a fintech startup. In total, these companies spent approximately 63,542 crore in cash over the three-year period ending in March 2022, generating an estimated revenue of 1.62 trillion rupees, the study noted.
The study further analyzed the financial data of the top 50 tech and tech-related companies by funding, excluding major players like Byju's whose FY22 financials have not yet been submitted to the Registrar of Companies. This is the third installment of the ongoing series. Among the 50 startups analyzed, the top 10 cash burners included several unicorns, such as Swiggy and BigBasket (food and grocery delivery), ShareChat (social media), Unacademy (edtech), PharmEasy (online pharmacy), and PhonePe, Cred, and BharatPe (financial startups). The list also featured Oyo (hospitality) and VerSe Innovation (parent company of Dailyhunt) and added that, "These businesses spent a minimum of INR 1 crore per day in FY22, resulting in a monthly cash burn rate of at least INR 30 crore." Other startups on the list included Vedantu and upGrad (edtech), Zepto, DealShare, Rebel Foods, and Zepto (fast commerce provider).
Moreover, the study further revealed that despite the high cash burn rates among many startups, a few firms were able to reduce costs in proportion to their revenues in FY22 that included Oyo, Zeta, KreditBee, Paytm, and Hike.
Cash burn rate is the rate at which a business uses its cash reserves or cash balance for operations and sales. It is a measure of negative cash flow, usually calculated as a monthly rate that indicates how much time a business has before it needs positive cash inflow or more funding.