Tiger Global-backed Groyyo’s growth stalls in FY24; losses climb

After achieving a 19X year-on-year growth in FY23, B2B manufacturing, and automation startup Groyyo saw its scale decline by 14.4% in the fiscal year ending March 2024. Moreover, the Tiger Global-backed company's losses increased by 9% during the same period.

Groyyo’s gross revenue decreased to Rs 421 crore in the last fiscal year from Rs 492 crore in FY23, according to its consolidated annual financial statements accessed from the Registrar of Companies.

Founded in July 2021 by Subin Mitra, Pratik Tiwari, and Ridam Upadhyay, Groyyo is a supply chain enablement platform that helps digitize manufacturing at small and medium businesses and match demand and supply from national and international clients.

The sale of products was the main source of revenue for Groyyo. Collections from commissions and subscriptions were other revenue drivers for the Delhi-based company in FY24.

For the B2B manufacturing and automation startup, the cost of procuring goods accounted for 78.65% of the overall expenditure. As the scale dipped, this cost decreased by 13.5% to Rs 409 crore in FY24. On the other hand, the cost of employee benefits surged by 81.5% to Rs 49 crore in the previous fiscal year (FY24).

Its legal, advertising, write-off assets, traveling, and other overheads led the overall cost to Rs 520 crore in FY24, compared to Rs 578 crore in FY23. see TheKredible for the detailed expense breakup.

The dip in scale caused its losses to increase by 8.8% to Rs 74 crore in FY24 from Rs 68 crore in FY23. On a unit level, it spent Rs 1.24 to earn a rupee. Its ROCE and EBITDA margin worsened to -46.15% and -13.45% respectively. By the end of FY24, its total current assets stood at Rs 256 crore , including Rs 99 crore in cash and bank balances.

In a statement to Entrackr, Subin Mitra said, "Losses had largely spiked due to an increase in ESOP related expenses - pertaining to INR 14 Cr. & Provisions on receivables from legacy domestic businesses. The company has now completely re-oriented its business strategy to focus only on high margin exports; This has enabled us to transition to a 20%+ take rate business while also hitting EBITDA profitability in FY25."

Mitra added that the firm moved away from domestic to become a 100% export oriented B2B Supply chain business - translating to much better unit economics & working capital. 

Groyyo has raised over $50 million across debt and equity including its $40 million Series A round led by Tiger Global. The company was also reportedly in talks to raise $40 million. According to the startup data intelligence platform TheKredible, Alpha Wave is the largest external stakeholder followed by Tiger Global.

Running up short on growth or margins can be a huge issue for a startup serving the market that Groyyo does, considering the intense competition and strong competitors in the game. The drop in valuations consequently can lead to ceding of far too much equity too early, removing a strong incentive for founders to stay committed.  That might have been a reason why Groyyo’s last fundraise in 2024 was a debt round.  Worsening financials will take that option off the table as we see, leading to a faster dilution of equity than planned. As we have seen with other B2B startups that set out to make a dent in streamlining manufacturing in India, be it OfBusiness or Zetwerk or others, the battle quickly scaled up to actually running operations or sub-contracting/becoming subcontractors themselves.  That is a function of the limited bandwidth available with smaller enterprise owners to lean on too many service providers. Groyyo perhaps faces a similar challenge of not just selling successfully, but actually staying relevant enough to convince the business owner that the purchase has been worth it. It’s one of the toughest tasks in India’s SME landscape. And Groyyo surely knows it by now. It should be fascinating to see how the firm seeks a sustainable pathway for itself out of this.

Update: The story has been updated to include an official statement from the Groyyo founder.