Startup funding ecosystem is fixing itself, focus on profitable growth good for the industry: Harsh Mariwala

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Corrections are now underway in the startup funding ecosystem, with a higher degree of accountability to lead the way to profit, which is a “good step” for the industry, according to the president of Marico and entrepreneur of foreground, Harsh Mariwala.

Now most funders say “I just don’t want to look at the growth, but I also want to see when will you start contributing to the bottom line, which is a good development,” Mariwala told the Tap Trust of India (PTI).

“Just growing to grow with no visibility on earnings is not good business in my opinion. At some point, the business has to become profitable,” he added.

In the current situation, when the funding environment is tight, now only the best proposal can attract funds, Mariwala said.

“Somehow things were too good for entrepreneurs, and a lot of entrepreneurs could get funding easily and they started splurging and burning money. But now I think it there is a higher degree of accountability to lead the way to profitability,” he added. .

Mariwala further stated that the timelines compared to previous days have increased which is good because the scaling of the business is high and the growth rate is much higher.

“But you can’t have indefinite periods without profitability. There has to be a roadmap to achieve profitability and I think most funders require that, which is a good thing compared to an era earlier where the demand for profit was much, much lower and less,” he added.

In the previous environment, everyone was funding because there was a “funding craze”, but that has corrected somewhat in the recent past, he added.

“Before it was too much funding and maybe now (there is) a correction happening. I’m sure if you have a good proposal you will get funds. It’s not that the funds are have completely dried up. But the funds are much more selective now,” he added.

Asked about the difficulties faced by entrepreneurs in the new era, Mariwala said unique businesses should definitely get funding.

“I wouldn’t say (the funding hasn’t) dried up, but it’s getting tighter in terms of being able to get funding,” Mariwala said, adding “If you have a unique story, if you have a good story, people will be there for But if you don’t have or have an average story and if you are a gamer me too then you will have a hard time getting funds.

While talking about Marico, he said he had made three acquisitions in the D2C (direct-to-consumer) space and would help them grow.

“The biggest benefit we can get from them is in terms of physical distribution. Often for these small businesses it’s too expensive for them to grow physically and also maybe the funds because there’s an impact in due to the tight funding environment, so there are opportunities for FMCG businesses to acquire and grow,” he added.

Asked about his message to the corporate world, Mariwala said it was a highly competitive environment and to achieve that, it was important to create a business model with a stronger right to earn.

“That right to win will only come from a single proposition. It could be pioneering, it could be innovative, it could be technology, it could be service-oriented. But you can’t be successful in the business environment. today with a me too a company where others are already there and you are one of the others,” he said, adding “so the need for differentiation is very, very high”.

Marico Innovation Foundation (MIF), founded by Mariwala, as a non-profit arm of FMCG Marico Company, has announced the 9th edition of its flagship awards platform Innovation for India Awards 2023.

The MIF, which aims to nurture and propel innovations, invited applications for two broad categories: for-profit organizations based in India, including startups and innovative companies, and individuals or non-profit organizations based in India. in India, including government entities, philanthropic bodies, charitable trusts. , multilateral agencies, community foundations, NGOs and CSR / corporate funds.

The award ceremony is expected to take place in February 2023 in Mumbai.

Edited by Affirunisa Kankudti
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