Course correction for Indian startups

Hello Readers,

“Only when the tide goes out do you discover who’s been swimming naked.”

The famous saying by Warren Buffett, one of the world’s most prolific investors, is quite applicable to what is happening in the Indian startup ecosystem right now.

The massive layoffs and dwindling funding on the back of a global market meltdown and consequent liquidity crunch have signalled the onset of the Indian ‘startup winter’.

Private equity and venture capital investments in April 2022 declined 27 percent year-on-year to $5.5 billion due to a slowdown in large startup investments, revealed an IVCA-EY report.

This comes after two years of skyrocketing valuations and fundraising. The liquidity crunch is an aggregation of multiple factors—global supply chain disruptions owing to lockdowns, the Russia-Ukraine war, meltdown in the global tech stocks, and spike in inflation and consequent hike in interest rates.

It is more heated after last year’s “overinflated euphoria” among investors, who signed big cheques for both early and growth startups, putting money more on a ‘vision’.

But who is likely to get more affected by the current market situation between early and growth-stage startups? Read more.

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What started as a project became a business opportunity for Tamizh. He continued to build similar prototypes, earning Rs 9 to 10 lakh per annum. Seeing the demand, he decided to capitalise on the success and set up Frigate in March 2021. Read more.