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Indian Startups raised $2 billion, 75% less than last year and comparatively smaller than the past three years.
Sources stated that at this rate by the end of the year, startups will only raise $10 billion. The same was at $30 in 2021 and $20 in 2022.
V.T. Bharadwaj, former India Managing Director of Sequoia Capital and leads Venture Capital of A91 Partners, further stated that he does not think a record raise similar to 2021 would be seen for at least a decade.
This could be a huge setback for us and even for the Prime Minister who emphasized that companies are the “backbone of India”.
Global Factors like inflation have pressured the investment climate in India and elsewhere. Even the startup funding in the US and China dropped.
Ankit Nagori, a former executive of Walmart's e-commerce arm, Flipkart, who now runs Curefoods, a cloud kitchen startup, said that Indian startups are selling the same 100 million and do not tend to cater to billion consumers. The Market seems inflated as well.
Investors noticed the sign of discontentment after the flop listing of the digital payment-making firm Paytm. In 2021, regulators raised questions about whether the valuation of startups is a realistic basis. Things have worsened since.
Three startup founders and Six investor sources told Reuters that they expect the funding environment to worsen within two years and many multi-billion-dollar firms to cut valuations. As per CB Insights, Half of the startups raised funds as of last year.
Shivkumar Ramaswami, a banker sensed the opportunity and is on the way to setting up an M&A-based desk at Indigoedge, his investment banking firm, as he can see a wave of consolidation his two colleges have the task of scouting M&A opportunities. He also stated that many funded companies had hit scale and stalled. Everyone needs to find a home, and companies cannot go for an IPO, so they are working for them.
( This blog post is based on an article provided by Reuters)
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