Unicorn Health Check | India's B2B e-commerce startups sees 3-6x growth

GST, which formalised a lot of small businesses, cheap internet and Unified Payments Interface (UPI) ushered them into the digital era. The pandemic exposed the fault-lines in supply chains, further driving up digital adoption. Now the China +1 strategy of global manufacturers means many of these Indian MSMEs are looking at a trillion-dollar export opportunity.

In fact, four out of the five B2B e-commerce startups on our list turned unicorns at the height of the pandemic in 2021. It didn't stop there, though — these billion-dollar startups went on to close multiple funding rounds and saw their valuations double or triple in the same year.

Unlike their B2C peers in the billion-dollar club, India's B2B unicorns have been able to justify their lofty valuations largely due to a strong pandemic-led growth, scaling their businesses anywhere between three to six times in FY22.

The commentary from the companies tells us that growth seen during the pandemic era could continue with four out of five on the list clocking over $1 billion in revenue in 2023.

OfBusiness, for instance, is looking at a 4x jump over its FY22 revenue, and these companies are doing it with hardly any cash-burn when compared to the B2C unicorns. India's B2B e-commerce marketplaces are the most capital-efficient among all the unicorns in India.

While Udaan, Moglix, and Zetwerk clocked losses in FY22, their cash-burn indicates profitability isn't far away. In fact, all of them are EBITDA positive, which many B2C unicorns have yet to achieve.

When it comes to Udaan, it experienced a tough period during the pandemic with challenges in the post-pandemic era multiplying for the company which runs a B2B platform for small retailers.

JioMart and other legacy distributors and wholesalers are back in the game and Udaan had to rejig its approach amid the funding crunch. The company says it has made strong improvements in gross margins and operating costs that included laying off 500 employees in FY22. Cash-burn, the company says, is down at least 60 percent. Udaan’s financing arm though is doing well, having disbursed Rs 4,000 crore to small retailers over the last two years.

That brings us to the future roadmap of these unicorns. Over the next few years. These companies want to consolidate their offerings to include credit and enterprise SaaS products to keep the business with them. Of course, cross border opportunities and taking their business global will not be far behind.