Why are billions being invested into Indian non-profitable startups by VCs?
Why are billions being invested into Indian non-profitable startups by VCs when it is well known that today the cost of acquisition (CAC) is much higher than the lifetime value (LTV) of customers in most B2C businesses? They have two hypotheses:
India is at around $2K per capita GDP, and the bet is that it will be at $4K in a few years from now. $4K is when the magic is supposed to happen, as it did in China. Essentially a bet on rising disposable incomes and increasing purchasing power.
India is one of the fastest-growing economies in the world. 10s of billions of dollars are waiting to enter India, no way around it. When money eventually comes in, it will be forced to pay top dollar in terms of valuation to the leaders, regardless of the profitability.