Don’t invest in startups whose profits are far away

Startups, Valuations, and the Profit Mirage: A Word of Caution for Investors

In today’s entrepreneurial world, especially for those managing family office funds, investment opportunities are everywhere. One of the trendiest avenues? Startups.

At first glance, they’re exciting. Fast-growing. Disruptive.
They come armed with sleek pitch decks, dazzling spreadsheets, and glowing reports—often signed off by the Big4 or well-known consulting firms.

They show you current revenues, then dazzle you with projected revenues.
And based on those numbers, they derive valuations—5x, 10x, sometimes even higher—depending on the industry and their storytelling skills.

You’ll hear:

“Look at the growth!”
“This business will hit IPO in no time!”
“Your investment will multiply!”

And just like that, a few major investors commit.
The rest follow—assuming if the big houses are in, it must be solid.

Yes, with fresh funds, the startup does scale.
Bigger teams. More customers. More turnover.

But pause for a moment—
Ask yourself the one question most skip over:

Where is the profit?

Profit Is a Fish, Not the Water  

Let me put it this way:

Profit is a fish in the sea.
More water doesn’t mean more fish.

You can pour money in. You can create huge turnover.
But if there’s no net profit—if the business is scaling losses instead of gains—then what are you really growing?

We’ve seen it repeatedly:
Startups reaching ₹1,000+ crore in turnover within a few years, but carrying equal or greater losses.
Yes, they look big on paper. But inside?
They’re bloated. Fragile. A business with fatty liver—not a healthy core.

And when it’s time to go public?
They can’t.
Negative net worth, no profitability track record, no long-term viability.

As investors, we’re right back to square one—if not worse.

The Real Lesson  

If a startup is projecting profitability only in the distant future, take a step back.

They’re not building a business.
They’re building a story.

So here’s the moral:

Don’t invest in startups if the only promise is profit at the end of a long tunnel.
Focus on models that are profitable—or at least on a visible, short path to profitability.

Because revenue is vanity.
Profit is reality.

And only profit can give you true returns.