Startups are evolving to manage growth in addition to profitability – Marketingwithanoy

It was only a matter of time.

As more tech companies go public, the necessary disclosure has meant that with access to more information about the financial condition of many startups, mainstream investors are beginning to question how profitable and sustainable these startups are.

Of course, this has led to some skepticism, and technology companies around the world are slowly changing the way they function to address these concerns.

At Jungle Ventures, we’ve observed the following key trends in how the startup ecosystem is evolving:

Going beyond demand-side innovation

Building a defensible moat is essential to the long-term success of any startup. For undifferentiated technology-enabled services like food delivery or mobility, user exclusivity is a challenge to achieve, as the user base is quite flirty and has little to no switching costs. In such cases, innovating to meet customer demand may not be enough. It is interesting to note that startups are now focusing on supply-side innovation to build a long-term competitive advantage.

One such success is DoorDash, which has managed to beat Grubhub and overtake Uber Eats, despite being relatively late in the US food delivery scene. Rather than just focusing on user acquisition (on the demand side), DoorDash has several services to empower its restaurant partners and help them grow their business.

Market Cap - DoorDash vs.  Uber

For example, DoorDash Drive is a white-label, flat-fee delivery service that allows merchants to generate their own orders and use DoorDash to make deliveries.

The pandemic has also made founders and investors realize the importance of building a resilient business.

We also have DoorDash Storefront, which allows restaurants to create their own online stores (on DoorDash) for takeout and delivery orders. It provides restaurants with customer data, which other third-party delivery platforms usually don’t share.

Such initiatives and value-added offerings helped DoorDash increase its restaurant partnerships (supply side) and exclusivity, which in turn improves user retention and engagement.

Indian food delivery company Zomato also has a similar merchant/B2B initiative called Hyperpure, a comprehensive sourcing solution that delivers fresh, hygienic, high-quality ingredients directly to restaurant partners of farmers, producers, mills, etc.

Although Hyperpure represents a small portion of revenue (about 10% of total revenue in fiscal 2020), the company plans to invest more than $50 million in the business over the next 18 to 24 months.

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