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You're right. Startups are overvalued. But they're still making money. The Indian 'unicorns' - Flipkart, Snapdeal, Ola, etc. have real revenues and customers.
by puranjay 11y ago
You're right. Startups are overvalued. But they're still making money. The Indian 'unicorns' - Flipkart, Snapdeal, Ola, etc. have real revenues and customers.
Do they deserve their $1Bn valuations? Probably not. But do they have enough customers to give them $100M-$1B revenues? Yes.
If these startups were public companies, they'd still be valued at at least half of what their last Crunchbase entry says
- dvirsky 11y agoThe ones who are in much more risk are those "selling shovels in a gold rush" - i.e. companies with a revenue stream based on services and products to other start-up companies.
- Sven7 11y agoThey have serious competition from Amazon and Uber. These are low/no margin, cash flow businesses, surviving on economies of scale. Can they survive a funding crunch? Who knows...
- puranjay 11y agoThis is what I wonder as well. Uber has grown massively here, but it has managed to do so by essentially bribing drives with incentives and riders with steep discounts. Once the discounts go and they have to start charging market rates, I wonder how it will affect their prices. At market rates, I don't think most customers here will choose them. But then again, while a cab company operates at, say, 20% profit margin to break even, Uber can probably operate at 5% margin thanks to its scale.
- jsudhams 11y agoI agree that they have real customer and service. But i think they will still go away. It is definitely a convinience that these service provides but see where Meru or Cell cab and so on... Once the volumes drops it is very difficult to continue these business. I think flipkart still does not make any money and customers are now aware that they exploit or cheat when it comes lot of home appliances and cloth. Most of the items you find on flipkart/snapdeal is priced higher just to show how much discount they give.i had purchased many items they have (non branded (which is about 75%) ) that are shown Rs 1000,50% off Rs 500 and in local market it is priced at Rs 500 and sold at Rs 475 with 5% off. But most people will chose 50% off :(. But slowly flipkart will become a price chcecking website than actual price. Don't get started on appliances and service....
- forgettableuser 11y agoAn additional problem is that in a downturn, people reassess what they are willing to spend money on. Overvalued companies with revenues today may see those revenues evaporate. This also happened in the first dotcom crash.