In the intricate landscape of Indian startups, the first half of the financial year 2023-24 (FY24) witnessed dynamic shifts and contrasting performances among ventures under the umbrella of investment giant Prosus. Meesho, an e-commerce major, emerged as a frontrunner with a remarkable Internal Return Rate (IRR) of 32%, showcasing its resilience and growth. However, not all players in the Prosus portfolio experienced the same success, as demonstrated by the challenges faced by PharmEasy and BYJU’S. This comprehensive analysis delves into the highs and lows, exploring the factors influencing the diverse trajectories of these startups.
- Meesho’s Stellar Rise
Meesho’s outstanding performance in H1 FY24 positions it as the star of Prosus’ India portfolio. With an IRR of 32%, Meesho claimed the third spot globally in Prosus’ startup portfolio, trailing behind Remitly and iFood. This achievement underscores Meesho’s strategic positioning and execution in the competitive e-commerce landscape, signaling positive growth prospects.
- ElasticRun’s Resilience Amid Losses
ElasticRun, a B2B e-commerce solutions provider, secured the second position in Prosus’ portfolio with an IRR of 31%. Despite nearly doubling its losses to INR 618.82 Cr in FY23, ElasticRun’s resilience and strategic value in the B2B sector contributed to maintaining a strong position within the portfolio.
- PayU India’s Financial Triumph
The fintech giant, PayU India, showcased robust performance, reporting returns exceeding 30%. This financial triumph was complemented by a 32% YoY growth in revenue, reaching $497 Mn in H1 FY24. PayU India’s profitability improvements and a significant reduction in consolidated trading losses by 72.5% YoY to $22 Mn affirmed its strategic growth in the payments and fintech vertical.
- Eruditus and Swiggy’s Varied Trajectories
Edtech platform Eruditus reported an IRR of 22%, reflecting steady performance in a competitive sector. In contrast, Swiggy, a foodtech decacorn, achieved a 7% IRR in H1 FY24. Prosus attributed Swiggy’s returns to substantial growth in Gross Merchandise Value (GMV) and a reduction in trading losses. The food delivery business exhibited a 17% growth, delivering a GMV of $1.43 Bn in the first six months of the year.
- BYJU’S and PharmEasy: Challenges and Valuation Adjustments
In stark contrast, two major players in the Prosus portfolio faced considerable challenges. E-pharmacy giant PharmEasy emerged as the biggest underperformer with an IRR of -41% in H1 FY24. BYJU’S, a troubled edtech decacorn, reported an IRR of -24% during the same period. Prosus marked down BYJU’S valuation to under $3 Bn, signifying an 85% decline from its previous valuation of $22 Bn. These developments shed light on the challenges faced by players in the healthcare and edtech sectors.
The mixed performance across Prosus’ portfolio reflects the evolving market sentiment and a renewed focus among startups on profitability and sustainability. This shift signifies a departure from the earlier emphasis on rapid expansion and valuation growth. As startups recalibrate their strategies, the landscape is witnessing a complex interplay of factors influencing investment decisions and market dynamics.
Prosus’ Operating Loss and Impairment Recognition
Despite the varied performances of its portfolio companies, Prosus reported an operating loss of $415 Mn in H1 FY24, compared to $329 Mn in H1 FY23. The losses were predominantly attributed to the recognition of impairment loss related to edtech investments. This underscores the challenges faced by the edtech sector and the need for strategic adjustments amid evolving market conditions.
The contrasting trajectories of startups within Prosus’ India portfolio in H1 FY24 reflect the intricate dynamics of the startup ecosystem. While Meesho and PayU India celebrate triumphs, challenges faced by BYJU’S and PharmEasy underscore the uncertainties and competitive pressures in their respective sectors. As startups recalibrate their strategies in pursuit of sustainability, investors navigate a complex terrain where adaptability and strategic resilience become paramount. The evolving market sentiment and financial performances of these startups paint a nuanced picture of India’s startup ecosystem, where resilience and strategic acumen will be key drivers of success in the post-pandemic era.