The harsh realities of a prolonged funding winter have taken a toll on Indian startup founders, with their salaries witnessing a steep decline in the financial year 2023-24 (FY24). A study of 54 founders of 30 technology startups reported that their median compensation fell 25.4 per cent to Rs 5.44 crore in FY24 from Rs 7.3 crore in FY23.
The salary reduction is in line with the broader woes of India’s startup ecosystem, which has been struggling to cope with an unexpected investment downturn. Together, these founders received Rs 291.5 crore as salary, indicating the money pinch on the industry.
Government Intervention Amid Investment Slump
The 2022 beginning winter in funding has hit startup investments very hard. Economic volatility everywhere across the world, specifically the Russia-Ukraine conflict, has been one of the primary reasons behind the crisis. The decline in venture capital investment has been dramatic—Indian startup funding declined from $42 billion in 2021 to $25 billion in 2022 and further down to a mere $10 billion in 2023. Even in 2024, the recovery is slow.
In turn, India’s government stepped in by scraping the contentious angel tax in July 2024 Union Budget. The plan was to trigger venture capital investments in startups and liberate entrepreneurs of financial hassles. But industry recovery has taken time, pushing startups to drastic measures like retrenchments, lower marketing outlays, and business restructuring. Some have gone to the extent of shutting shops to weather economic storms.
Profits, Losses, and Top-Earning Founders
Even if losses have been incurred, the 30 startups in the ambit of the study collectively recorded operating income of Rs 73,715 crore in FY24. While 11 of them collectively recorded losses of Rs 4,876 crore, the remaining companies collectively posted a profit of Rs 7,960 crore.
Among the highest-paid startup founders, FirstCry’s Supam Maheshwari was at the top with an annual compensation of Rs 103.8 crore. But his earnings took a massive plunge, nearly 50 per cent lower than his Rs 200.7 crore compensation in FY23, as per FirstCry’s red herring prospectus.
Nithin and Nikhil Kamath, cofounders of Zerodha, occupied the second slot on payrolls. Nithin Kamath took home Rs 33.5 crore, a 30 per cent decrease from Rs 48 crore pocketed in FY23, while Nikhil Kamath experienced the same fall to the tune of Rs 33.9 crore. Including other sources of remuneration, the total payout of the siblings was Rs 96 crore apiece.
As the startup ecosystem of India goes through these troubled times, whether the founders will be able to steer their firms through lean times financially will decide the strength of the industry in the coming years. Whether the intervention by the government and measured cost-cutting will prove sufficient to initiate revival can only be seen.
Read Also: 8th Pay Commission: Calculate Your Expected Salary