Bengaluru-based fintech startup Setu, now under the ownership of Pine Labs, has navigated a financial landscape marked by growth and challenges in the fiscal year 2022-23 (FY23). The API infrastructure provider experienced a notable 118% YoY increase in its net loss, reaching INR 62 Cr, driven by a significant rise in expenses. Pine Labs’ acquisition of Setu for approximately $70 Mn in FY23 marked a pivotal moment for the fintech player.
Financial Highlights of Setu in FY23:
- Net Loss Surge: Setu’s net loss surged from INR 28.4 Cr in FY22 to INR 62 Cr in FY23, reflecting a 2X rise in expenses.
- Operating Revenue: Operating revenue showed a marginal increase of 22%, reaching INR 14.2 Cr in FY23 compared to INR 11.6 Cr in FY22.
- Acquisition Valuation: Pine Labs acquired Setu at a valuation of 41X to its operating revenue in FY23.
- Overall Revenue: Total revenue, including other income, stood at INR 17.5 Cr, a 6.6% increase from INR 16.4 Cr in FY22.
Expenditure Breakdown:
- Salaries & Wages: Setu allocated INR 28.1 Cr for salaries, wages, and bonuses in FY23, reflecting a 17% increase from the previous fiscal year.
- ESOPs: ESOPs expenses increased by over 500%, reaching INR 29.8 Cr in FY23, up from INR 4.8 Cr in FY22.
- Cloud Solutions: Cloud storage expenses accounted for 12% of the overall expenses, amounting to INR 9.4 Cr in FY23, compared to INR 4.3 Cr in FY22.
Unit Economics and EBITDA Margin:
- On a unit economics basis, Setu spent INR 5.6 to earn every rupee from operations in FY23.
- EBITDA margin deteriorated to -348% in FY23 from -170% in FY22.
Funding and Investors:
- Setu has raised $18 Mn independently and counts Alpha Wave Global and Lightspeed among its investors.
Post-Acquisition Developments:
- After Pine Labs’ acquisition, Setu retained its brand identity, business, teams, and customers, with the founders continuing to lead the startup.
- Setu received an in-principle license from the Reserve Bank of India to operate as an account aggregator, allowing secure and digital access to financial information.
IPO Plans and Market Conditions:
- Pine Labs, once eyeing a NASDAQ listing, has, like many other Indian startups, put its IPO plans on hold due to current volatile market conditions.
