February 15, 2024

From Garage to IPO: The Wild Ride of Startup Evolution

by Team Oister
Garage

Ever looked at a startup’s growth chart? It’s usually a neat upward line or a misleading simplicity if you will. 

This polished graph omits the real grind. It doesn’t capture the sleepless nights, the close calls with potential failure, or the Eureka moments that come unexpectedly. We only see the glossy finish — the neat upward line — and not the gritty work-in-progress filled with passionate debates, makeshift marketing strategies, and the relentless pursuit of that next milestone. 

Here, every small win, even a successful product demo or a positive customer review, is celebrated as heartily as securing a major investor. The shared rides to networking events. The mix of anticipation and dread before launching a new feature. The thrill of seeing your brand mentioned for the first time in the media. 

Maybe it's for the best that we only get the highlight reel. After all, not everyone's keen on the messy, behind-the-scenes hustle.

So what’s the lowdown on India’s startup scene? 

It’s booming, to say the least. In the global startup league, we're sitting pretty at number three, with startups here raking in more than $146 billion in funding since 2014.

Startup Funding in 2023 in India

Total Funding

$11.3 billion

Number of Deals

984

Total Funding to Early-Stage Startups

$2.5 billion

Total Funding to Late-Stage Startups

$8.8 billion

Number of Early-Stage Deals

656

Number of Late-Stage Deals

181

Number of Unicorns Minted

2

Number of M&As

145

Sources: Inc42, Entrackr

Total Funding Raised Per Year

YEAR

FUNDING AMOUNT ($ Billion)

DEAL COUNT

2014

5

376

2015

9

983

2016

6

1,045

2017

13

996

2018

12

832

2019

13

812

2020

11

953

2021

42

1,584

2022

25

1,517

2023

10

897

Source: Inc42

Biggest Funding Rounds in 2023

PhonePe

$850 million

Lenskart

$600 million

Flipkart

$600 million

DMI Finance

$400 million

OLA Electric

$384 million

Udaan

$340 million

Builder.ai

$250 million

Zepto

$231 million

Perfios

$229 million

Insurance Dekho

$210 million

Source: Inc42

Now, in most conventional conveyor belts, you might be able to see the beginning and the end in one frame. But this is the startup funding process we’re talking about — it’s anything but simple. 

Stage 1: Pre-Seed Funding

We start, of course, at the loading dock. This is where the ideas pour out of the truck, form a neat line and then take their place on the conveyor belt. At this point, the startup is an unintelligible blob of latent energy waiting to be activated. 

Pre-seed funding is generally used to create a rough prototype of the idea entrepreneurs can use for show-and-tell. In most cases, funding at this stage comes from friendly loans from their loved ones or even donations in good faith. The funding amount generally ranges between ₹50 lakh to ₹1 crore.

However, in some cases, startups can even reach out to external investors for pre-seed funding. In this case, the funding amount can be much higher.

Pre-Seed Funding in 2023

ofScale

$371,752

YardErp

$200,000

YardDrone

$500,000

YardHotel

$200,000

YardStream

$500,000

Peptris Technologies

$1,000,000

Ugees

Nestroots

$360,804

Sources: Growth List

Stage 2: Seed Funding

After the loading dock, the massless blob moves ahead on the conveyor belt and reaches the assembly phase. This is where the startup begins to take form. 

Nuts and bolts are screwed to give a skeletal structure. Components like team members, products and services, and basic business models are added. Startups generally use seed funding to hash out important details like how to generate initial traction for their product and how to start generating revenue.

The amount of funding, in this case, can vary greatly depending on who the investor is. Entrepreneurs can approach angel investors or even early-stage VCs at this stage.

In 2023, startups in India received a total of $681 million in seed funding, down 72% from the previous year. As for the number of deals, that dropped to 467 from 737 in 2022.

Seed Funding Raised Per Year

YEAR

FUNDING AMOUNT ($ Million)

DEAL COUNT

2014

43

103

2015

238

586

2016

251

660

2017

195

593

2018

450

378

2019

255

312

2020

410

392

2021

1,149

703

2022

2,436

737

2023

681

467

Source: Inc42

Graph 1

Source: Inc42

Stage 3: Series A

This is where things start to get real. You can almost see the startup taking shape in front of your eyes.

Now that the base skeletal structure has already been created, the startup moves into the expansion phase. This means rigorous testing and evaluation to check if the idea is truly viable. 

This would probably be one of the loudest sections on the conveyor belt, where large machines hammer into the sides of the structure to test for durability. It passes through rains of fire and chambers of liquid nitrogen to simulate extreme conditions. 

After all, the market is not going to be kind to a hapless idea that can’t hold its form. Oh no, the world is savage – it can crush an entrepreneur’s dreams to dust with its strong jaws.

Over the course of this phase, the startup undergoes significant changes and refinement. It sheds its training gear and metamorphoses into a more market-ready format.

As you can imagine, investors at this stage scrutinise every aspect with a keen eye for detail. They’re like the quality control officers at the end of this stage – they will not let you pass unless you meet their standards for excellence. 

Series A Funding in 2023

Neo

$35 million

Vridhi Home Finance

$18 million

Sugar.fit

$11 million

Inc.5 

$10 million

Sarvam AI

$41 million

InsuranceDekho

$150 million

Source: Entrackr, Entrackr-Sarvam AI

Stage 4: Series B

Once the startup passes through Series A, the conveyor belt splits into different pathways. Each leads to different markets with new opportunities and challenges. Depending on the business model that has been optimised in the previous stages, the startup now opts for a more streamlined path.

In the acceleration zone of Series B, the conveyor belt speeds up, indicating rapid growth and expansion. This is all about scaling up – there are not a lot of structural changes. Instead, the aim is to increase the scope of business and revenue. The startup takes on larger, more powerful engines (funding) to increase output (scale operations, enter new markets). The focus is on boosting performance to meet increasing demand. 

Series B Funding in 2023

The Whole Truth

$15 million

Grip

$8.4 million

Namdev Finvest

$14.9 million

InsuranceDekho

$60 million

Wiz Freight

$11.2 million

Oro Money 

$12.5 million

Credgenics

$50 million

Agnikul Cosmos

$26.7 million

Source: Matrix Partners, Economic Times, Growth List

Stage 5: Series C

Series C opens up a whole new segment of the conveyor belt. Each winding pathway leads into a diversification conveyor from the expansion zone. It's like adding new assembly lines within the factory to produce a variety of products. 

The startup is now a significant player in its original market and is looking to conquer new territories. Gone is the hapless noob. In its place is a force in its right, ready to take on the world. Investors during this stage are akin to strategic planners, focusing on long-term growth and sustainability, ensuring the startup's machinery is versatile and adaptive to changes in the market landscape.

Series C Funding in 2023

Captain Fresh

$13.2 million

Akshayakalpa

$12 million

Slurrp Farm

$7.2 million

Biriyani by Kilo

$8.6 million

The Sleep Company

$22 million

Skyroot Aerospace

$27 million

Euler Motors

$14.4 million

Go Mechanic

$6 million

Auxilo

$57 million

SarvaGram

$35 million

Vegrow

$46 million

Kitchens@

$65 million

Healthplis Technologies

$22 million

Source: Economic Times, Techinasia, Matrix Partners India, Biospectrum India

Stage 6: Series D and Beyond

Once we enter the Series D zone, the world opens up. The winding pathways ultimately lead into a huge open space where the startup pumps its distribution network full of steroids. This is where the conveyor belt extends beyond the factory, reaching into ports and distribution centres worldwide. 

This isn't just a young venture anymore. Now, they're eyeing bigger moves, like snapping up other businesses or trying their hand in new fields. The cash flow at this point is all about locking in their lead in the market and making sure the money keeps rolling in for the long haul.

Please note that after this stage, startups can go for subsequent funding rounds like Series E, F and more. Alternatively, many startups also opt for IPOs.

Series D and Beyond Funding in 2023

MakeO

$16 million

Wow! Momo

$49 million

RenewBuy

$40 million

KreditBee

$120 million

Mintifi

$110 million

InCred

$60 million

Purple Style Labs

$8 million

ZobHunger

$900,000

Perfios

$229 million

SirionLabs

$25 million

Udaan

$350 million

Source: Economic Times, Series D and Beyond, TechCrunch, Growth List

Late Stage Funding Raised Per Year

YEAR

FUNDING AMOUNT ($ Billion)

DEAL COUNT

2014

4.3

46

2015

6.1

77

2016

3.3

76

2017

10

97

2018

8.6

122

2019

8.3

159

2020

9.2

164

2021

32

250

2022

14

191

2023

5.6

83

Source: Inc42

Graph 2

Source: Inc42

Stage 7: IPO

This is the final stage of the conveyor belt. It leads to the delivery bay—the IPO. Here, the startup, now a fully formed product, is showcased to the world. By this point, they've transformed so much that they're hardly recognisable from when they started—what entered as a rough idea is now ready to take on the world. 

IPO or Initial Public Offering marks the end of the private funding journey that startups go through. After this process, the company can list on the public stock exchanges and obtain investments from retail and institutional investors alike!

A total of 57 companies launched their IPO in 2023. The table below shows the top ones.

Issue Name

Offer Price (Rs)

Listing Day – Close Price (Rs)

Listing Day Gain / Loss (%)

Listing Date

Issue Size (₹ Cr)

Tata Technologies Limited

500

1314.25

162.85

Nov 30, 2023

3,042.51

ideaForge Technology Limited

672

1295.50

92.78

Jul 07, 2023

567.29

Utkarsh Small Finance Bank Limited

25

47.94

91.76

Jul 21, 2023

500.00

Indian Renewable Energy Development Agency Ltd

32

59.99

87.47

Nov 29, 2023

2,150.21

Motisons Jewellers Limited

55

101.18

83.96

Dec 26, 2023

151.09

Source: Chittorgarh

Frequently Asked Questions

Q. What is the typical journey of a startup from inception to IPO?
A. The journey typically starts in the pre-seed stage with idea formation, progresses through multiple funding stages including seed, Series A through C, and culminates in an IPO where the company goes public.
Q. What challenges do startups face during their growth stages?
A. Startups often face challenges such as securing funding, scaling operations, and navigating competitive markets while maintaining product or service quality and company culture.
Q. How crucial is funding in the early stages of a startup?
A. Funding is critical as it helps startups build their product, gain market traction, and cover operational costs until they can generate sustainable revenue.
Q. What are the key indicators of success for a startup preparing for an IPO?
A. Key indicators include strong and consistent revenue growth, scalable business model, market leadership, a solid management team, and the ability to generate profits or a clear path to profitability.
Q. How does the Indian startup ecosystem support the growth of new startups?
A. The Indian startup ecosystem supports growth through vibrant venture capital availability, government initiatives, incubators, accelerators, and a growing pool of talent skilled in technology and entrepreneurship.

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