Startups are Evolving to Manage Growth alongside Profitability

Startups are Evolving to Manage Growth alongside Profitability

It was only a matter of time before it happened. With more information on the financial state of many startups becoming available as more digital companies go public, mainstream investors have begun to wonder how successful and sustainable many enterprises are.

Naturally, this has sparked some doubt, and tech companies all across the world are gradually adapting their operations to accommodate these concerns. We’ve noticed the following major themes in the startup ecosystem’s evolution at Jungle Ventures:

Any startup’s long-term success depends on the creation of a defensible moat. Customer exclusivity is difficult to achieve for homogenous tech-enabled services like food delivery or mobility, because the user base is dispersed and has zero or no switching costs. In such circumstances, simply innovating to suit client demand may not be sufficient. 

It’s worth noting that, in order to gain a long-term competitive advantage, entrepreneurs are now focused on supply-side innovation. Despite coming somewhat late to the meal delivery game in the United States, DoorDash has managed to beat past Grubhub and catch up with Uber Eats.

Rather than focusing just on user (demand-side) acquisition, DoorDash has created a number of services to empower and assist its restaurant partners in growing their businesses. DoorDash Drive, for example, is a white-label, flat-fee delivery service that allows merchants to create their own orders and have them delivered by DoorDash.

The pandemic has also made entrepreneurs and investors recognize how critical it is to develop a resilient company. We also have DoorDash Storefront, which allows restaurants to set up their own online stores for pick-up and delivery orders (on DoorDash). It gives eateries access to customer information that other third-party delivery platforms don’t generally disclose.

DoorDash was able to boost its restaurant partnerships (supply-side) and exclusivity as a result of these initiatives and value-added offers, which improved user retention and engagement. Zomato, an Indian food delivery service, offers a similar merchant/B2B effort called Hyperpure, which is a one-stop procurement solution that brings fresh, sanitary, high-quality foods straight from farmers, producers, mills, and other sources to restaurant partners. Despite the fact that Hyperpure generates a tiny portion of revenue (about 10% of total sales in fiscal year 2020), the company plans to invest more than $50 million in the company over the next 18 to 24 months.