VCs Should Focus On A Startup’s Revenue Growth And Not Unicorn Tag: Peak XV’s Mohit Bhatnagar

Amid a boom in the Indian startup ecosystem minting unicorns, Peak XV Partners’ (formerly Sequoia Capital India and SEA) managing director Mohit Bhatnagar today (September 26) said that the venture capital firm focuses more on a startup’s revenue scale rather than its valuation.

In a conversation with Inc42’s cofounder and CEO Vaibhav Vardhan at Inc42’s Money X event, Bhatnagar said that the ‘unicorn’ tag is more of a marketing tag and does not bear any consequence in the VC’s investment playbook. 

“We believe that the revenue scale is the only thing that one should look for when investing. While people have pointed out an exit issue in India, I think the major thing that we should look at is revenues. If the company has attained a decent revenue scale, then it is more ready to go for an initial public offering (IPO). The public offering is the perfect opportunity to exit,” he said. 

His comments come at a time when more startups are breaching over $1 Bn-mark in the current year. In 2024, six startups including Moneyview, Rapido, Perfios, Krutrim raised funding at unicorn valuation. Besides, startups like Whatfix and M2P Fintech have also raised capital at a valuation closer to the unicorn status. 

Commenting on Peak XV’s portfolio, Bhatnagar said that the VC firm currently has 45 startups with operating revenues north of $100 Mn. 

Meanwhile, the firm also has 23 startups with over $200 Mn in revenues, he claimed, adding that it has built a rich pipeline for IPOs in the near future. 

Bhatnagar also acknowledged the ongoing startup IPO boom adding that the Indian public market has displayed an increased acceptance for startup IPOs in recent times. “There is complete acceptance of the Indian startup ecosystem in public markets,” he added.

For Peak XV, three startups Go Digit, ixigo and Awfis have made their public market debut this year. From ixigo’s IPO, Peak XV lapped up 8.2X returns when it offloaded almost 70 Lakh shares for INR 65 Cr. In case of Awfis, Peak XV sold 6.6 Mn shares in the IPO and earned about INR  253 Cr, which is a 3X return on its investment. 

Despite more startups taking the IPO plunge this year, Bhatnagar also maintained some caution regarding biting into the trend before time. “If companies are pushed into going public before they are ready to do so, it won’t end well for anyone,” he added.