The early stages of Bizongo’s growth resembled a smooth progression. The company secured Series A funding in November 2016, Series B in May 2018, Series C in April 2021, and Series D in December 2021. The financial trajectory was impressive—$3 million, $22 million, $51 million, and $110 million, respectively. Valuations also soared, starting modestly before reaching $130 million and later $600 million. However, the road to Series E in 2023 proved significantly more challenging.
For co-founder Sachin Agrawal, Series E meant ‘evaluation.’ Reflecting on the company’s valuation, Agrawal acknowledged that it had been overestimated but noted that rapid-growth startups often experience inflated valuations in high-growth economies like India. “We knew we were overvalued,” he admitted.
A Changing Investment Landscape
Bizongo was not alone in facing unrealistic valuations. In 2021, India saw an explosion of new unicorns, surging from a dozen in the previous year to 44. However, by 2022, the investment climate had changed, with only 26 unicorns emerging. Funding, which peaked at $4.57 billion in January 2022, had dropped to $870 million by July. A clear funding winter had arrived.
Despite this shift, Agrawal remained optimistic when seeking investment in October 2022. The company’s performance was strong: Gross Merchandise Value (GMV) surged from ₹346 crore in FY21 to ₹1,800 crore in FY22, while operating revenue jumped from ₹3.7 crore to ₹68 crore. Losses were still considerable—₹86 crore in FY21 and ₹100 crore in FY22—but Bizongo was on track to generate its first free cash flow in FY23. The plan was to approach ten top investors.
Initially, the effort seemed successful. A prominent global investor planned to make its India debut by leading Bizongo’s funding round with a $40 million investment. However, the excitement was short-lived. The collapse of Silicon Valley Bank triggered financial uncertainty, leading the investor to withdraw. Around the same time, global tech markets were declining, and concerns about governance issues in various startups further dampened investor confidence. With no immediate investors lined up, Agrawal expanded his outreach to 40 additional funds.
Adapting to the New Funding Climate
Fundraising conditions had shifted dramatically. Growth capital was scarce, investors sought lower valuations, and profitability became a key metric. “Everyone started evaluating startups based on return on capital or profit before tax,” Agrawal noted. This approach made it difficult to justify previous valuations.
Despite the challenges, Bizongo generated ₹50 crore in free cash flow in FY23. By mid-2023, the company recognized the need to continue operating with limited external funding. Instead of prioritizing rapid expansion, Bizongo pivoted toward sustainable growth.
An unexpected hurdle arose when a venture capital firm expressed interest but required a financial audit by Deloitte. Already working with EY and PwC, Bizongo agreed and later onboarded KPMG, making it one of the few startups audited by all four major accounting firms. Agrawal viewed this as a necessary step toward long-term financial transparency and IPO readiness.
A Hard-Earned Victory
By October 2023, Bizongo successfully raised $50 million in Series E funding. Despite the valuation rising from $600 million to $980 million, it fell just short of unicorn status. “We were almost there, but missing the unicorn tag was a blessing,” Agrawal remarked. The fundraising environment had been tough, but the company emerged stronger, focused on profitability rather than mere valuation milestones.
Anand Daniel, a partner at Accel, underscored the significance of Bizongo’s achievement. Amidst a global downturn, investors remained optimistic about the company’s potential to transform B2B supply chains. “Bizongo operates in a value pool exceeding $100 billion,” Daniel noted. However, he emphasized the importance of achieving growth in a capital-efficient manner.
For Agrawal, the experience underscored the importance of financial discipline. “This funding winter taught me that businesses must be prepared for the worst,” he said. Whether or not Bizongo achieves unicorn status, its path forward is clear—profitability and sustainable expansion will be the foundation of its future success.
