Varun Alagh on Scale Before Profitability

Honasa became India's first unicorn of 2022 in January that year, raising $52 million led by Sequoia at a $1.2 billion valuation — a milestone the company frames as validation of rapid growth and category leadership, even though the same valuation benchmark would later become politically charged during the IPO debate.

Mamaearth's IPO became a referendum on India's tolerance for high-valuation startup listings. Founded by the husband-wife duo of Varun and Ghazal Alagh in 2016, the brand had crossed 5 million customers within two years and turned over ₹100 crore within four, becoming one of India's fastest-growing consumer brands and earning unicorn status before the public offer.

The Substack analysis frames Mamaearth's listing as a market-wide signal: 2023 had seen 93 IPOs in India by November, and investor appetite had visibly shifted toward profitability over richly-priced growth. The author argues that retail investors would no longer accept valuation anchored on narrative alone — a meaningful change from the 2021 cycle that had embraced Zomato and Paytm at any price.

Honasa's revenue trajectory was cited as both a strength and a weakness: revenue from operations moved from ₹1,097.84 million in FY20 to ₹4,599.9 million in FY21 to ₹9,434.65 million in FY22 — a 4.2x step-up then a 2x step-up. Strong growth, but critics argued the growth had been purchased with disproportionate ad-spend, not earned through durable brand equity.

The article argues the verdict from retail investors is unambiguous: flashy valuations must yield to profitability, and influencers glorifying IPO-led startups can no longer move the market on their own. Startups eyeing 2024 listings — including OYO, Ola Electric, Swiggy, Navi, PayMate and Digit Insurance — were reportedly reorienting toward sustainable businesses in response to this shift.

The author's framing — that Mamaearth's IPO 'saga reveals a shift in India's IPO landscape' — is the analytical takeaway: a single listing functioned as a market-wide correction mechanism, forcing Indian startup founders to internalise that the public market's tolerance for growth-without-profit had narrowed materially since 2021.

On financial trajectory, Varun reports Honasa hit a ₹500 crore run rate in FY21 and doubled that in FY22, with the explicit ambition to keep growing 'disruptively' in subsequent years. He sets a long-term vision of building a beauty and personal care company larger than some existing incumbents by the end of the decade — a goal that framed the IPO as a milestone, not an endpoint.