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While the Indian startup ecosystem experienced a sharp funding peak during FY22 reaching $50 billion, a gradual onset of the funding winter over the subsequent quarters led to a 70 per cent drop in FY23 to around $15 billion, a report showed on Tuesday.

As funding plummets, startups are hunkering down, reducing burn rate and expediting their path to profitability, according to the report by market research firm Redseer. 

"The increasing cost of capital and interest rates, recession in developed markets, a decline in the value of tech stocks, and the slowdown in consumer internet growth have all been challenges for sustained funding," said Mohit Rana, partner at Redseer. 

There are about 100 unicorns and less than 400 public companies with a market cap of more than $1 billion in the country. 

Ownership of founders in startups is also limited (0-20 per cent) in 59 per cent of private companies as compared to public companies (over 50 per cent) in 65 per cent of public companies. 

As startups sail through rough waters, boards need to ensure future alignment and take more responsibility to guide and support founders during challenging times, Rana added. 

"Listed tech companies have made significant improvement over the last five quarters. Paytm launched new products, expanded into new business segments, and upsold/cross-sold to existing customers to increase revenue per customer and reduce CAC. Zomato increased take rates from restaurant partners and delivery costs from customers," he said. 

According to the report, the number of profitable unicorns is projected to grow across most sectors in three to four years, from 30 in FY22 to 55 in FY27. 

Nearly 50 per cent of unicorns are expected to become profitable by FY27, while 20 per cent will likely struggle due to regulatory challenges, plummeting demand and unclear business models. 

They also expect some of the struggling unicorns to pivot to new models, get acquired or close entirely, the report noted. 

On the bright side, profitable unicorns in India could generate 5 times the profit in FY27 as they did in FY22.