Editor's Note

Red Oleander

As we march ahead with young teams led mostly by women, we proudly present to you the Outlook Start-up Outperformers 2023. In a crowd of lists and ranks, this compilation of three rankings stands out by its sheer robustness, its eye to detail and the exhaustive parameters that will help you separate the chaff from the grain. 

A “wind of change” has been sweeping our corridors for a few years now. Finally, the dust is settling as the Outlook Group and all its platforms witness a reinvigoration. It is a new look Outlook where legacy and tradition meet the heady exuberance of youth, where we tread paths seldom taken by others as risk is high with low sight of profits. But, for us, the return on our intellectual investment is the continuation of setting new and unbiased narratives. From exposing the threats to fiscal federalism to bringing to you how a delayed census is hurting millions of India’s poor much before the opposition raised it in Parliament, we ignite and fuel debates.

So, when we tackle the subject of climate change, we dive deep and present the first comprehensive measure of sectoral preparedness for adopting a robust ESG framework.

As we march ahead with young teams led mostly by women, we proudly present to you the Outlook Start-up Outperformers 2023. In a crowd of lists and ranks, this compilation of three rankings stands out by its sheer robustness, its eye to detail and the exhaustive parameters that will help you separate the chaff from the grain.

If Indian start-ups must emerge as job providers and harbingers of innovation, then they need to be nurtured to create intergenerational companies. And the responsibility lies with the entire ecosystem, especially with investors and policymakers. But for any sector to flourish, there is a need for regular, unbiased, independent analysis to help its stakeholders spot the gathering clouds and their silver linings from afar. Thus, the role of the media is called into action.

To sum up our bouquet of rankings, the purpose is to highlight growth-stage start-ups that are showing early movement towards profitability and rank states and cities on ease of doing business.

It is the growth-stage landscape where red oleanders bloom, where the young and new challenge legacy every day, where meteoric rise of companies and heady success stories of never-before-known heroes fill us with hope that there is another India where growth and development are not eclipsed by hate. It is a stage of starting up that decides every aspect of how the future of a company will pan out. Growth stage is perhaps the only phase where so much can be achieved by perseverance, initiative and a good idea, where the last name is inconsequential for success. But the start-up valley is not a utopia untouched by economic cycles and geopolitics, so when the bubble of heady valuations burst and the ruthless fangs of investors are exposed, they lay bare the realities of cash burn under the veneer of inflated GMV. Hence, we sifted through 15 parameters across several categories to bring to you the pearls that are showing signs of business resilience.

We defined growth-stage start-ups as those valued between $10 million and $800 million. Data tells us that there are about 4,000 start-ups in India in this phase. So, we decided to narrow our analysis to the top five sectors that saw maximum start-up activity last year. And they are D2C, ecommerce, edtech, fintech and healthtech.

On expected lines, tech start-ups emerged as darlings of investors. While technology is a unique human capacity whose regulated innovation has improved our well-being, what about human ingenuity? Often underrated when faced with the kind of social and environmental challenges confronting us, human ingenuity has been the final saviour from the messy problems our species faces from time to time. The analogy can easily be stretched to Indian start-ups, where we saw great innovation taking shape in sectors such as sustainability, cleantech and deeptech. So, we categorised them as “watch-out-for sectors”.

We churned over 45 parameters for states and 22 for cities to bring to you the best places to start up. Interesting patterns emerged: for example, a state’s academic edge over others because of institutions of excellence it promotes is not directly proportional to the quality of start-ups mushrooming there. To delve into the subjective aspects, such as impact of a state or city’s culture on decisions of opening shop there, we surveyed Top 100 growth stage start-ups that emerged from our analysis. Nuggets of insights from our exhaustive process, spread over six months, are scattered over the following 150 pages of this issue.

For the research-spirited readers, we have a detailed section on methodology, where we explain our models of evaluation and regression analysis.

As newer war fronts open and global orders go into a tizzy, they leave deep fissures in public markets. The sum total of it would mean prolonging of the funding winter. But money still needs to be deployed, albeit, with caution. Investors will become more and more choosy, where the robust business models will become deciding factors for writing cheques.

Our rankings hold hope as it shows growth-stage start-ups posting profits. The absolute numbers might be small, but consciousness has set in.

With Xi Jinping yet to make up his mind about how much more he will punish the Chinese tech industry, India has emerged as the sweet spot. IT minister Rajeev Chandrasekhar in an exclusive interview to Outlook Business promises to capitalise on this advantage with policy interventions.

Even without the China angle, our usual narrative—about demographics, exponential digital adoption and, as of last quarter, the highest growth rate among major economies— makes India a compelling destination for global fund houses. That is why stalwarts of the industry writing in this edition continue to harp on the need and virtues of positive economics in start-ups. Kunal Bahl extols young founders to focus on profitability within the first year of operations, Ritesh Agarwal highlights the tightrope that these entrepreneurs need to walk to create a sustainable business model. Sanjay Nath writes on what makes city clusters tick over standalone cities, while Ananth Narayanan points to the important aspect of mentoring as a means to scaling-up.

Outlook’s work does not end with this annual bouquet of rankings: we are already at work along with our partners to design a formula that will tell you which start-up has the highest chance of bagging its next round of funding.

I end this note with gratitude to Bhagwan Chowdhry, faculty director, I-Venture@ISB for his guidance; Rahul Bharadwaj, founder, Ayvole, for obliging our endless demand for data insights, and Bharath N. Padasale, management consultant, Accenture, for his passion in seeing this project through. Cheers to the entire team of Outlook Business and Outlook Start-Up for burning the midnight oil and living with Nishant and my tyrannical deadlines. Special mention of Peali Datta Gupta for reinforcing the old saying about friends in need.