In 2023, nearly two-thirds (62%) of startup founders in the country continued to prioritize profitability over growth for the second consecutive year, according to a report by venture debt firm InnoVen Capital.
The survey, which included over 100 startup founders across various stages and sectors, revealed that 62% considered profitability a more significant focus, up from 55% in 2022.
30% of the surveyed founders claimed to achieve Ebitda profitability in 2023, a notable increase from the 19% reported in the previous year.
A downturn in the funding environment since mid-2022 led startups to emphasize efficiency and profitability, often to justify their high valuations.
Ashish Sharma, Managing Partner at InnoVen Capital, noted a higher appreciation for sustainable business models, increased focus on unit economics/profitability, and realistic valuation expectations in the industry.
Despite 2023 experiencing the lowest funding in seven years for tech startups, 85% of founders are optimistic about raising their next round at a higher valuation in the current year.
However, hiring sentiment is largely tepid, with 61% of founders expecting the pace of hiring to remain the same or decrease compared to the previous year. Additionally, founders identified artificial intelligence as the most-hyped sector, while B2B and manufacturing were considered under-hyped.
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