“The right partner will trust you during bad times," Lenskart’s Peyush Bansal Shares Why Indian Startups Face Problems

At the recent Bengaluru Tech Summit 2024, Peyush Bansal, the founder of Lenskart, pointed out a significant issue plaguing the Indian startup ecosystem. According to Bansal, founders are increasingly fixated on chasing after high valuations, potentially overlooking more critical aspects of building a sustainable business.

This trend has caught the attention of industry experts and investors alike, raising questions about the long-term viability of startups in India.

The Lenskart Success Story

Lenskart, a leading eyewear marketplace, has been at the forefront of the Indian startup scene, attracting substantial funding from top investors such as ChrysCapital, Temasek, and Fidelity. In the past 18 months alone, the company has secured close to $1 billion in capital, positioning itself as a major player in the e-commerce space. With ambitious plans for a public-market listing in the next two years, Lenskart's valuation has soared to $5.6 billion, reflecting investor confidence in its growth potential.

The Valuation Obsession

While achieving a high valuation can be a significant milestone for startups, it should not be the sole focus of founders. Peyush Bansal's remarks shed light on the unintended consequences of the valuation obsession prevalent in the startup ecosystem. By prioritizing valuations over fundamentals such as product-market fit, customer acquisition, and profitability, founders run the risk of building unsustainable businesses that are vulnerable to market fluctuations.

Are Valuations Misleading?

One of the critical questions raised by Bansal is whether inflated valuations paint an accurate picture of a startup's true worth. While a high valuation may attract attention and investment, it does not guarantee long-term success. Startups that prioritize valuations over building a solid foundation risk collapsing when faced with challenges such as market saturation, regulatory changes, or economic downturns.

“The right partner will see what you are seeing, trust you not just during good times but also in bad times, and think along with you for the long term. When we got investors like ADIA [Abu Dhabi Investment Authority] or Temasek, we knew these funds could stay with the company for 10 years,” Bansal said at the Bengaluru Tech Summit 2024 on Thursday during a fireside chat with Prashanth Prakash, founding partner of venture capital firm Accel India.

The Importance of Sustainable Growth

Founders must shift their focus from short-term gains to long-term sustainability. Building a resilient business requires a strategic approach that prioritizes innovation, customer satisfaction, and operational efficiency. While valuations may fluctuate, a strong business model and a loyal customer base will withstand the test of time. By emphasizing sustainable growth over fleeting valuations, founders can set their startups up for long-term success.

Also read: FM Sitharaman Wants Brick-and-Mortar Retail Survive Alongside Q-commerce to Strengthen India's Brand Image (startuppedia.in)