Addressing the gathering at the startup conclave organised by Money Control in Bengaluru, both the founders stressed that investors and founders may have overestimated the potential size of the Indian market.

“The actual monetisable market size is a subset of 100 million. India is a developing country and evolving very fast, but as of now it is a subset of 100 million," said Kamath.

According to PhonePe co-founder and CEO Sameer Nigam, even with an annual active user base of 300 million, only 100 million would likely be buying PhonePe’s various financial services products.

“People are projecting revenues and not margins and that is the fundamental problem. The fear of missing out or FOMO model is playing out. Margins are getting eroded because of too many players," Nigam was quoted as saying.

“We are seeing very strong results early on in the lending space. We are riding the wave of a robust and strong economy,” he noted.

PhonePe could reach 500 million users by Diwali this year, said Nigam.

There was no new unicorn in India in the first half of 2023 as startup funding plunged more than 70 per cent in the January-June period from a year ago, signalling that the funding winter is here to stay as several top unicorns continue to face economic downturn.

The first six months witnessed Indian startups raise just $5.48 billion, from $19.5 billion they raised during the same period last year, according to data by market intelligence firm Tracxn.