SlideShare a Scribd company logo
Has the great Indian start-up bubble finally burst?
Subtitle-
This article tries to analyze and understand why the start-up sector in the country, which has
seen amazing growth in the past couple of years, is currently struggling to hold on to its
glory. It also analyses factors like the recent firings and decreasing valuations to get a better
understanding of the entire issue. Whether all of these events will catalyze into something
disastrous for the start-up ecosystem or is it just a one-off calamity remains to be seen.
Introduction
Indian start-ups are going through a hard time, with many of them laying off employees for
reasons like conserving cash for day-to-day operations. Since the start of this year, almost
8,000 employees have been laid off from various start-ups, indicating trouble brewing in the
near future. Some estimates say that this number will likely increase as the year progresses.
Other instances like Paytm’s Paytm mall losing nearly all of its valuation are painful
examples of things going south in the Indian start-up scenario. However, to understand the
current situation at hand, it is imperative that we start from the beginning with a healthy dose
of context.
India’s accelerating start-up ecosystem(till 2021)
Even in the pandemic, India’s start-ups received a significant boost in 2021, with the number
of unicorns formed jumping to more than four times that of the previous year, 2020. Venture
capital investments grew by almost four times from 2020 to 2021, almost in tandem with the
growth in unicorns.
Chart made from various websites provided in sources section
India received a record amount of $38.5 Bn in 2021, primarily driven by an increase in the
number of deals (1,545 in 2021 vs. 809 in 2020) and the average deal size (from ~$12.5 Mn
to ~$ 25Mn over 2020-2021). The massive success in India’s start-up ecosystem till 2021 can
14
44
10
9
8
0
2
4
1
1
1
1
0 10 20 30 40 50
2022 (first 4 months)
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
Number of unicorns in India over the years
be attributed to many factors like an increase in mobile and data penetration, a decrease in the
cost of the internet, a robust digital payment ecosystem, and a rise in the number and quality
of incubators, to name a few. During the pandemic specifically, the work from home model
fueled growth as start-ups had access to the best talent in all of the country. However, it is
ironic that start-ups are now laying off employees left, right, and center.
Analyzing the current start-up ecosystem
Investors the world over now prefer growth prospects over profitability. There is a strategic
need to place greater importance on growth. This is driven by factors like the network effect,
which states that the higher the number of users of a particular product/service, the greater the
benefits will be for all stakeholders involved. Thus, there is a business need to add further
consumers into the umbrella, and start-ups achieve this by providing great discounts to their
consumers, thereby incurring massive losses for their current and potential customers.
Start-ups justify the high customer acquisition cost to their investors, who align with the
logic. From the consumer’s perspective, the greater the value addition that the start-up’s
products/services provide, the easier it is to purchase the same. While all this makes sense, it
is necessary to consider the profitability part of the equation. At least investors should
understand that there has to be a time when the continuous growth phase should be replaced
with the profit-making phase. This can be achieved by increased revenues, decreased
operating costs, or a mix of both.
2022- a bad year for start-ups
I. Massive layoffs- a bad omen?
Layoffs are a natural part of any business; however, it becomes an area of concern when
companies across multiple industries show similar trends. In total, 8,364 employees have
been fired in 2022 from a combined total of 13 start-ups which comes to more than 640
employees fired per company on an average.
Start-up Employees laid-off Rationale
Lido More than 1200 Company shut operations due to funding crunch
Unacademy More than 1,000 Cost reduction and removing redundant roles
WhiteHat Jr. More than 1,000 Employees resigned after they were asked to return to the office
Cars24 More than 600 Cutting costs and performance-linked layoffs
Vedantu More than 600 Reduction in funding and drop in demand for online education
Trell More than 300 Cutting down costs and extending the business runway
Furlenco More than 180 Shifting to an asset-light model amidst expansion
Companies like Mfine, Trell, and Invact Metaversity have laid off large chunks of their
employee base owing to a plethora of reasons. On average, start-ups have laid about 17% of
their employees in 2022.
II. The deteriorating ed-tech industry
The edtech start-ups in India, after a year of massive consolidation, are facing existential
challenges. Some of the problems are detailed in the points below-
 Established companies like Byjus have long been accused of pursuing over-aggressive
sales targets leading to extreme employee stress as they have to achieve over-
ambitious sales targets. Consumer posts targeting the company over poor products,
difficulties with cancellations and refunds, and bad teaching quality have been
rampant on social media for quite a while now.
 Lido Learning has closed its operations and fired almost all of its employees even
after securing massive funding rounds from marquee investors like Alibaba and
Anupam Mittal.
 Invact Metaversity, co-founded by Twitter India CEO Manish Maheswari, has also
been facing challenges. There was a tussle between the two co-founders and
challenges relating to funding. The start-up had raised capital from investors like
Kishore Biyani, BECO Capital, M Venture Partners, and Mohandas Pai.
III. Decreasing valuation
As discussed earlier, Paytm mall has lost more than 99.5% of its valuation, which shocked
many, including the investors. However, the exit of early investors like the Alibaba group has
allowed Paytm group to buy back its shares at a very low price.
Zomato’s share has lost more than half of its value since the beginning of this year, wiping
out thousands of crores (Rs. 88,000 Cr) of its market capitalization. Similarly, Nyka has lost
around a third of its value since the start of 2022.
Possible solutions
Here are a couple of possible solutions that start-ups can follow
1. Switching from the hire and fire model to more long-term impact-creating models is
an excellent way to prevent attrition. Start-ups often invest a large portion of their
money on employee training which it needs to recoup from the employee down the
line. This amount is effectively lost if the employee is laid off without the
organization breaking even on the training cost.
2. Prioritizing business continuity and strategizing extensively on extending the business
runway for start-ups. It seems that many start-ups are not able to judiciously utilize
the funding they receive and go for business expansion without strengthening their
core competencies. This should never be the case as it leads to the start-up
overstretching its assets.
3. Change the business outlook from being focused on growth to focusing on
profitability. Although growth is an essential aspect of the business, the importance of
turning a profit remains as the proverbial elephant in the room that needs to be talked
about. Well-known bootstrapped start-ups such as Zoho and Zerodha should lead the
way for future start-ups.
Conclusion
As dire as the situation might seem, there is a lot of time and opportunities for the start-up
ecosystem to introspect and change its direction for the better. There is an element of trial-
and-error that is still going on in the country's nascent start-up ecosystem. With time as more
founders and investors realize the role that profitability plays in business continuity, the better
the outcome will be for all stakeholders involved.
Sources-
 https://img.etimg.com/photo/msid-88566226,imgsize-164267/Indianunicorns.jpg
 https://newsonair.com/2022/05/07/india-gets-its-100th-unicorn-startup-total-valuation-
reaches-332-7-
billion/#:~:text=According%20to%20the%20ministry%2C%20in,total%20valuation%20
of%20%2418.9%20billion.
 https://inc42.com/features/over-5600-employees-impacted-in-indian-startup-layoffs/
 https://economictimes.indiatimes.com/tech/startups/cars24-fires-600-employees-across-
various-departments/articleshow/91659360.cms
 https://indianexpress.com/article/explained/explained-why-vedantu-sacking-employees-
again-means-for-edtech-startups-in-india-7925818/
 https://inc42.com/features/indian-startup-layoffs-tracker-13-startups-laid-off-8364-
employees-in-2022/
 https://www.bain.com/insights/india-venture-capital-report-2022/
 https://inc42.com/buzz/paytm-malls-fall-from-unicorn-club-valuation-drops-99-5-to-13-
mn/#:~:text=Later%20in%202019%2C%20major%20ecommerce,a%20valuation%20of
%20%243%20Bn.
 https://www.business-standard.com/article/companies/ronnie-screwvala-backed-startup-
lido-learning-shuts-shop-workers-seek-help-122022300602_1.html

More Related Content

Similar to Has the great Indian startup bubble finally burst.docx

Corporate Digest Magazine December 2017
Corporate Digest Magazine December 2017Corporate Digest Magazine December 2017
Corporate Digest Magazine December 2017
Kumar Kanaujia
 
Start Up India
Start Up IndiaStart Up India
Start Up India
Shweta Shah
 
EMERGING CAPITAL PRESENTATION.pptx
EMERGING CAPITAL PRESENTATION.pptxEMERGING CAPITAL PRESENTATION.pptx
EMERGING CAPITAL PRESENTATION.pptx
legallyinclinedprofe
 
Recent Revolution brought about by Startups
Recent Revolution brought about by StartupsRecent Revolution brought about by Startups
Recent Revolution brought about by Startups
Ayush Badala
 
Reinventing the Organization
Reinventing the OrganizationReinventing the Organization
Reinventing the Organization
The RBL Group
 
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdfWhy So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
auroraaudrey4826
 
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdfWhy So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
bellabrookly2022
 
Hbl how much cash does a company need
Hbl how much cash does a company needHbl how much cash does a company need
Hbl how much cash does a company need
thinkernomics
 
A Study on Working Capital Management at ITI Limited.pdf
A Study on Working Capital Management at ITI Limited.pdfA Study on Working Capital Management at ITI Limited.pdf
A Study on Working Capital Management at ITI Limited.pdf
Chandan Srivastava
 
Impact Of M&A On Employees & Working Conditions
Impact Of M&A On Employees & Working ConditionsImpact Of M&A On Employees & Working Conditions
Impact Of M&A On Employees & Working Conditions
Shiva Shankara
 
Factors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docxFactors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docx
mecklenburgstrelitzh
 
Factors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docxFactors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docx
lmelaine
 
How to Grow a Business - Summary
How to Grow a Business - SummaryHow to Grow a Business - Summary
How to Grow a Business - Summary
Bob Kacergis
 
Business of the business is to do business
Business of the business is to do businessBusiness of the business is to do business
Business of the business is to do business
Anurag Ranjan
 
Essay On Effect Of Merger
Essay On Effect Of MergerEssay On Effect Of Merger
Essay On Effect Of Merger
Jennifer Cruz
 
EFHK_p16-19
EFHK_p16-19EFHK_p16-19
EFHK_p16-19
Rahul Chawla
 
Finsight - Private Equity in India: Recent observations and emerging trends a...
Finsight - Private Equity in India: Recent observations and emerging trends a...Finsight - Private Equity in India: Recent observations and emerging trends a...
Finsight - Private Equity in India: Recent observations and emerging trends a...
South Asia Fast Track
 
Organisation Structure
Organisation StructureOrganisation Structure
Organisation Structure
Lisa Fields
 
Cognizant business plan competition Phase 1
Cognizant business plan competition Phase 1Cognizant business plan competition Phase 1
Cognizant business plan competition Phase 1
doshihardik
 
Indian Start-Up Scenario
Indian Start-Up ScenarioIndian Start-Up Scenario
Indian Start-Up Scenario
Mario Clement
 

Similar to Has the great Indian startup bubble finally burst.docx (20)

Corporate Digest Magazine December 2017
Corporate Digest Magazine December 2017Corporate Digest Magazine December 2017
Corporate Digest Magazine December 2017
 
Start Up India
Start Up IndiaStart Up India
Start Up India
 
EMERGING CAPITAL PRESENTATION.pptx
EMERGING CAPITAL PRESENTATION.pptxEMERGING CAPITAL PRESENTATION.pptx
EMERGING CAPITAL PRESENTATION.pptx
 
Recent Revolution brought about by Startups
Recent Revolution brought about by StartupsRecent Revolution brought about by Startups
Recent Revolution brought about by Startups
 
Reinventing the Organization
Reinventing the OrganizationReinventing the Organization
Reinventing the Organization
 
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdfWhy So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
 
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdfWhy So Many Tech Companies Are Laying Off Employees in 2023.pdf
Why So Many Tech Companies Are Laying Off Employees in 2023.pdf
 
Hbl how much cash does a company need
Hbl how much cash does a company needHbl how much cash does a company need
Hbl how much cash does a company need
 
A Study on Working Capital Management at ITI Limited.pdf
A Study on Working Capital Management at ITI Limited.pdfA Study on Working Capital Management at ITI Limited.pdf
A Study on Working Capital Management at ITI Limited.pdf
 
Impact Of M&A On Employees & Working Conditions
Impact Of M&A On Employees & Working ConditionsImpact Of M&A On Employees & Working Conditions
Impact Of M&A On Employees & Working Conditions
 
Factors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docxFactors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docx
 
Factors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docxFactors Influencing the Growth of Venture CapitalIntroduct.docx
Factors Influencing the Growth of Venture CapitalIntroduct.docx
 
How to Grow a Business - Summary
How to Grow a Business - SummaryHow to Grow a Business - Summary
How to Grow a Business - Summary
 
Business of the business is to do business
Business of the business is to do businessBusiness of the business is to do business
Business of the business is to do business
 
Essay On Effect Of Merger
Essay On Effect Of MergerEssay On Effect Of Merger
Essay On Effect Of Merger
 
EFHK_p16-19
EFHK_p16-19EFHK_p16-19
EFHK_p16-19
 
Finsight - Private Equity in India: Recent observations and emerging trends a...
Finsight - Private Equity in India: Recent observations and emerging trends a...Finsight - Private Equity in India: Recent observations and emerging trends a...
Finsight - Private Equity in India: Recent observations and emerging trends a...
 
Organisation Structure
Organisation StructureOrganisation Structure
Organisation Structure
 
Cognizant business plan competition Phase 1
Cognizant business plan competition Phase 1Cognizant business plan competition Phase 1
Cognizant business plan competition Phase 1
 
Indian Start-Up Scenario
Indian Start-Up ScenarioIndian Start-Up Scenario
Indian Start-Up Scenario
 

More from Biswadeep Ghosh Hazra

Biswadeep Ghosh Hazra_Assignment_First step.pdf
Biswadeep Ghosh Hazra_Assignment_First step.pdfBiswadeep Ghosh Hazra_Assignment_First step.pdf
Biswadeep Ghosh Hazra_Assignment_First step.pdf
Biswadeep Ghosh Hazra
 
PM School Challenge_Biswadeep Ghosh Hazra.pptx
PM School Challenge_Biswadeep Ghosh Hazra.pptxPM School Challenge_Biswadeep Ghosh Hazra.pptx
PM School Challenge_Biswadeep Ghosh Hazra.pptx
Biswadeep Ghosh Hazra
 
[Project] Customer experience and buying behaviour in e-commerce sites
[Project] Customer experience and buying behaviour in e-commerce sites[Project] Customer experience and buying behaviour in e-commerce sites
[Project] Customer experience and buying behaviour in e-commerce sites
Biswadeep Ghosh Hazra
 
[Project] Financial Statement Analysis
[Project] Financial Statement Analysis[Project] Financial Statement Analysis
[Project] Financial Statement Analysis
Biswadeep Ghosh Hazra
 
[Project] Business Statistics Project
[Project] Business Statistics Project[Project] Business Statistics Project
[Project] Business Statistics Project
Biswadeep Ghosh Hazra
 
[Project] Optimization Model for Dairy Supply Chain
[Project] Optimization Model for Dairy Supply Chain[Project] Optimization Model for Dairy Supply Chain
[Project] Optimization Model for Dairy Supply Chain
Biswadeep Ghosh Hazra
 
[Project] TSS Report Submission (Shell sustainability initiatives)
[Project] TSS Report Submission (Shell sustainability initiatives) [Project] TSS Report Submission (Shell sustainability initiatives)
[Project] TSS Report Submission (Shell sustainability initiatives)
Biswadeep Ghosh Hazra
 
[Project] Financial management
[Project] Financial management[Project] Financial management
[Project] Financial management
Biswadeep Ghosh Hazra
 
[Project] Accounting for Decision Making (ADM) Project
[Project] Accounting for Decision Making (ADM) Project[Project] Accounting for Decision Making (ADM) Project
[Project] Accounting for Decision Making (ADM) Project
Biswadeep Ghosh Hazra
 
[Project] Banking in 2030 (Commercial Banking Project)
[Project] Banking in 2030 (Commercial Banking Project)[Project] Banking in 2030 (Commercial Banking Project)
[Project] Banking in 2030 (Commercial Banking Project)
Biswadeep Ghosh Hazra
 
[Project] Study of Warehousing Practices of Wal-Mart
[Project] Study of Warehousing Practices of Wal-Mart[Project] Study of Warehousing Practices of Wal-Mart
[Project] Study of Warehousing Practices of Wal-Mart
Biswadeep Ghosh Hazra
 
[Project] Customer Relationship Management (CRM)
[Project] Customer Relationship Management (CRM)[Project] Customer Relationship Management (CRM)
[Project] Customer Relationship Management (CRM)
Biswadeep Ghosh Hazra
 
[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION
[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION
[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION
Biswadeep Ghosh Hazra
 
[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...
[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...
[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...
Biswadeep Ghosh Hazra
 
[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win
[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win
[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win
Biswadeep Ghosh Hazra
 
[Project] MARKETING TO CONSUMERS AT BOP
[Project] MARKETING TO CONSUMERS AT BOP[Project] MARKETING TO CONSUMERS AT BOP
[Project] MARKETING TO CONSUMERS AT BOP
Biswadeep Ghosh Hazra
 
[Report] ITSDI PROJECT [Mindfire Solutions]
[Report] ITSDI PROJECT [Mindfire Solutions][Report] ITSDI PROJECT [Mindfire Solutions]
[Report] ITSDI PROJECT [Mindfire Solutions]
Biswadeep Ghosh Hazra
 
[Project] Consumer Perception and strategies of DOVE Soap
[Project] Consumer Perception and strategies of DOVE Soap[Project] Consumer Perception and strategies of DOVE Soap
[Project] Consumer Perception and strategies of DOVE Soap
Biswadeep Ghosh Hazra
 
[Project] OPERATIONS MANAGEMENT II PROJECT REPORT
 [Project] OPERATIONS MANAGEMENT II PROJECT REPORT  [Project] OPERATIONS MANAGEMENT II PROJECT REPORT
[Project] OPERATIONS MANAGEMENT II PROJECT REPORT
Biswadeep Ghosh Hazra
 
[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...
[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...
[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...
Biswadeep Ghosh Hazra
 

More from Biswadeep Ghosh Hazra (20)

Biswadeep Ghosh Hazra_Assignment_First step.pdf
Biswadeep Ghosh Hazra_Assignment_First step.pdfBiswadeep Ghosh Hazra_Assignment_First step.pdf
Biswadeep Ghosh Hazra_Assignment_First step.pdf
 
PM School Challenge_Biswadeep Ghosh Hazra.pptx
PM School Challenge_Biswadeep Ghosh Hazra.pptxPM School Challenge_Biswadeep Ghosh Hazra.pptx
PM School Challenge_Biswadeep Ghosh Hazra.pptx
 
[Project] Customer experience and buying behaviour in e-commerce sites
[Project] Customer experience and buying behaviour in e-commerce sites[Project] Customer experience and buying behaviour in e-commerce sites
[Project] Customer experience and buying behaviour in e-commerce sites
 
[Project] Financial Statement Analysis
[Project] Financial Statement Analysis[Project] Financial Statement Analysis
[Project] Financial Statement Analysis
 
[Project] Business Statistics Project
[Project] Business Statistics Project[Project] Business Statistics Project
[Project] Business Statistics Project
 
[Project] Optimization Model for Dairy Supply Chain
[Project] Optimization Model for Dairy Supply Chain[Project] Optimization Model for Dairy Supply Chain
[Project] Optimization Model for Dairy Supply Chain
 
[Project] TSS Report Submission (Shell sustainability initiatives)
[Project] TSS Report Submission (Shell sustainability initiatives) [Project] TSS Report Submission (Shell sustainability initiatives)
[Project] TSS Report Submission (Shell sustainability initiatives)
 
[Project] Financial management
[Project] Financial management[Project] Financial management
[Project] Financial management
 
[Project] Accounting for Decision Making (ADM) Project
[Project] Accounting for Decision Making (ADM) Project[Project] Accounting for Decision Making (ADM) Project
[Project] Accounting for Decision Making (ADM) Project
 
[Project] Banking in 2030 (Commercial Banking Project)
[Project] Banking in 2030 (Commercial Banking Project)[Project] Banking in 2030 (Commercial Banking Project)
[Project] Banking in 2030 (Commercial Banking Project)
 
[Project] Study of Warehousing Practices of Wal-Mart
[Project] Study of Warehousing Practices of Wal-Mart[Project] Study of Warehousing Practices of Wal-Mart
[Project] Study of Warehousing Practices of Wal-Mart
 
[Project] Customer Relationship Management (CRM)
[Project] Customer Relationship Management (CRM)[Project] Customer Relationship Management (CRM)
[Project] Customer Relationship Management (CRM)
 
[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION
[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION
[Project] SERVICES OPERATIONS MANAGEMENT PRESENTATION
 
[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...
[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...
[Project] FRAMEWORK FOR SUPPORTING “BUSINESS PROCESS REENGINEERING “-BASED BU...
 
[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win
[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win
[Project] Retail Management Report Brands Versus Private Labels- Fighting to Win
 
[Project] MARKETING TO CONSUMERS AT BOP
[Project] MARKETING TO CONSUMERS AT BOP[Project] MARKETING TO CONSUMERS AT BOP
[Project] MARKETING TO CONSUMERS AT BOP
 
[Report] ITSDI PROJECT [Mindfire Solutions]
[Report] ITSDI PROJECT [Mindfire Solutions][Report] ITSDI PROJECT [Mindfire Solutions]
[Report] ITSDI PROJECT [Mindfire Solutions]
 
[Project] Consumer Perception and strategies of DOVE Soap
[Project] Consumer Perception and strategies of DOVE Soap[Project] Consumer Perception and strategies of DOVE Soap
[Project] Consumer Perception and strategies of DOVE Soap
 
[Project] OPERATIONS MANAGEMENT II PROJECT REPORT
 [Project] OPERATIONS MANAGEMENT II PROJECT REPORT  [Project] OPERATIONS MANAGEMENT II PROJECT REPORT
[Project] OPERATIONS MANAGEMENT II PROJECT REPORT
 
[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...
[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...
[Project] TO STUDY THE PREFERENCES AND PERCEPTIONS OF THE CONSUMERS TOWARDS T...
 

Recently uploaded

Best practices for project execution and delivery
Best practices for project execution and deliveryBest practices for project execution and delivery
Best practices for project execution and delivery
CLIVE MINCHIN
 
Business storytelling: key ingredients to a story
Business storytelling: key ingredients to a storyBusiness storytelling: key ingredients to a story
Business storytelling: key ingredients to a story
Alexandra Fulford
 
Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)
Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)
Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)
Lviv Startup Club
 
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....
Lacey Max
 
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdfHOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf
46adnanshahzad
 
DearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUniDearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUni
katiejasper96
 
Profiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdfProfiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdf
TTop Threads
 
Satta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel Chart
Satta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel ChartSatta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel Chart
Satta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel Chart
➒➌➎➏➑➐➋➑➐➐Dpboss Matka Guessing Satta Matka Kalyan Chart Indian Matka
 
2024-6-01-IMPACTSilver-Corp-Presentation.pdf
2024-6-01-IMPACTSilver-Corp-Presentation.pdf2024-6-01-IMPACTSilver-Corp-Presentation.pdf
2024-6-01-IMPACTSilver-Corp-Presentation.pdf
hartfordclub1
 
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...
APCO
 
GKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt PresentationGKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt Presentation
GraceKohler1
 
The Steadfast and Reliable Bull: Taurus Zodiac Sign
The Steadfast and Reliable Bull: Taurus Zodiac SignThe Steadfast and Reliable Bull: Taurus Zodiac Sign
The Steadfast and Reliable Bull: Taurus Zodiac Sign
my Pandit
 
The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...
The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...
The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...
Stephen Cashman
 
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...
my Pandit
 
Call8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessingCall8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessing
➑➌➋➑➒➎➑➑➊➍
 
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
Neil Horowitz
 
The latest Heat Pump Manual from Newentide
The latest Heat Pump Manual from NewentideThe latest Heat Pump Manual from Newentide
The latest Heat Pump Manual from Newentide
JoeYangGreatMachiner
 
list of states and organizations .pdf
list of  states  and  organizations .pdflist of  states  and  organizations .pdf
list of states and organizations .pdf
Rbc Rbcua
 
2022 Vintage Roman Numerals Men Rings
2022 Vintage Roman  Numerals  Men  Rings2022 Vintage Roman  Numerals  Men  Rings
2022 Vintage Roman Numerals Men Rings
aragme
 
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
The Most Inspiring Entrepreneurs to Follow in 2024.pdfThe Most Inspiring Entrepreneurs to Follow in 2024.pdf
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
thesiliconleaders
 

Recently uploaded (20)

Best practices for project execution and delivery
Best practices for project execution and deliveryBest practices for project execution and delivery
Best practices for project execution and delivery
 
Business storytelling: key ingredients to a story
Business storytelling: key ingredients to a storyBusiness storytelling: key ingredients to a story
Business storytelling: key ingredients to a story
 
Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)
Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)
Maksym Vyshnivetskyi: PMO KPIs (UA) (#12)
 
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....
 
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdfHOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf
 
DearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUniDearbornMusic-KatherineJasperFullSailUni
DearbornMusic-KatherineJasperFullSailUni
 
Profiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdfProfiles of Iconic Fashion Personalities.pdf
Profiles of Iconic Fashion Personalities.pdf
 
Satta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel Chart
Satta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel ChartSatta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel Chart
Satta Matka Dpboss Matka Guessing Kalyan Chart Indian Matka Kalyan panel Chart
 
2024-6-01-IMPACTSilver-Corp-Presentation.pdf
2024-6-01-IMPACTSilver-Corp-Presentation.pdf2024-6-01-IMPACTSilver-Corp-Presentation.pdf
2024-6-01-IMPACTSilver-Corp-Presentation.pdf
 
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...
 
GKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt PresentationGKohler - Retail Scavenger Hunt Presentation
GKohler - Retail Scavenger Hunt Presentation
 
The Steadfast and Reliable Bull: Taurus Zodiac Sign
The Steadfast and Reliable Bull: Taurus Zodiac SignThe Steadfast and Reliable Bull: Taurus Zodiac Sign
The Steadfast and Reliable Bull: Taurus Zodiac Sign
 
The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...
The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...
The Heart of Leadership_ How Emotional Intelligence Drives Business Success B...
 
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...
 
Call8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessingCall8328958814 satta matka Kalyan result satta guessing
Call8328958814 satta matka Kalyan result satta guessing
 
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
 
The latest Heat Pump Manual from Newentide
The latest Heat Pump Manual from NewentideThe latest Heat Pump Manual from Newentide
The latest Heat Pump Manual from Newentide
 
list of states and organizations .pdf
list of  states  and  organizations .pdflist of  states  and  organizations .pdf
list of states and organizations .pdf
 
2022 Vintage Roman Numerals Men Rings
2022 Vintage Roman  Numerals  Men  Rings2022 Vintage Roman  Numerals  Men  Rings
2022 Vintage Roman Numerals Men Rings
 
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
The Most Inspiring Entrepreneurs to Follow in 2024.pdfThe Most Inspiring Entrepreneurs to Follow in 2024.pdf
The Most Inspiring Entrepreneurs to Follow in 2024.pdf
 

Has the great Indian startup bubble finally burst.docx

  • 1. Has the great Indian start-up bubble finally burst? Subtitle- This article tries to analyze and understand why the start-up sector in the country, which has seen amazing growth in the past couple of years, is currently struggling to hold on to its glory. It also analyses factors like the recent firings and decreasing valuations to get a better understanding of the entire issue. Whether all of these events will catalyze into something disastrous for the start-up ecosystem or is it just a one-off calamity remains to be seen. Introduction Indian start-ups are going through a hard time, with many of them laying off employees for reasons like conserving cash for day-to-day operations. Since the start of this year, almost 8,000 employees have been laid off from various start-ups, indicating trouble brewing in the near future. Some estimates say that this number will likely increase as the year progresses. Other instances like Paytm’s Paytm mall losing nearly all of its valuation are painful examples of things going south in the Indian start-up scenario. However, to understand the current situation at hand, it is imperative that we start from the beginning with a healthy dose of context. India’s accelerating start-up ecosystem(till 2021) Even in the pandemic, India’s start-ups received a significant boost in 2021, with the number of unicorns formed jumping to more than four times that of the previous year, 2020. Venture capital investments grew by almost four times from 2020 to 2021, almost in tandem with the growth in unicorns. Chart made from various websites provided in sources section India received a record amount of $38.5 Bn in 2021, primarily driven by an increase in the number of deals (1,545 in 2021 vs. 809 in 2020) and the average deal size (from ~$12.5 Mn to ~$ 25Mn over 2020-2021). The massive success in India’s start-up ecosystem till 2021 can 14 44 10 9 8 0 2 4 1 1 1 1 0 10 20 30 40 50 2022 (first 4 months) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Number of unicorns in India over the years
  • 2. be attributed to many factors like an increase in mobile and data penetration, a decrease in the cost of the internet, a robust digital payment ecosystem, and a rise in the number and quality of incubators, to name a few. During the pandemic specifically, the work from home model fueled growth as start-ups had access to the best talent in all of the country. However, it is ironic that start-ups are now laying off employees left, right, and center. Analyzing the current start-up ecosystem Investors the world over now prefer growth prospects over profitability. There is a strategic need to place greater importance on growth. This is driven by factors like the network effect, which states that the higher the number of users of a particular product/service, the greater the benefits will be for all stakeholders involved. Thus, there is a business need to add further consumers into the umbrella, and start-ups achieve this by providing great discounts to their consumers, thereby incurring massive losses for their current and potential customers. Start-ups justify the high customer acquisition cost to their investors, who align with the logic. From the consumer’s perspective, the greater the value addition that the start-up’s products/services provide, the easier it is to purchase the same. While all this makes sense, it is necessary to consider the profitability part of the equation. At least investors should understand that there has to be a time when the continuous growth phase should be replaced with the profit-making phase. This can be achieved by increased revenues, decreased operating costs, or a mix of both. 2022- a bad year for start-ups I. Massive layoffs- a bad omen? Layoffs are a natural part of any business; however, it becomes an area of concern when companies across multiple industries show similar trends. In total, 8,364 employees have been fired in 2022 from a combined total of 13 start-ups which comes to more than 640 employees fired per company on an average. Start-up Employees laid-off Rationale Lido More than 1200 Company shut operations due to funding crunch Unacademy More than 1,000 Cost reduction and removing redundant roles WhiteHat Jr. More than 1,000 Employees resigned after they were asked to return to the office Cars24 More than 600 Cutting costs and performance-linked layoffs Vedantu More than 600 Reduction in funding and drop in demand for online education Trell More than 300 Cutting down costs and extending the business runway Furlenco More than 180 Shifting to an asset-light model amidst expansion Companies like Mfine, Trell, and Invact Metaversity have laid off large chunks of their employee base owing to a plethora of reasons. On average, start-ups have laid about 17% of their employees in 2022. II. The deteriorating ed-tech industry The edtech start-ups in India, after a year of massive consolidation, are facing existential challenges. Some of the problems are detailed in the points below-
  • 3.  Established companies like Byjus have long been accused of pursuing over-aggressive sales targets leading to extreme employee stress as they have to achieve over- ambitious sales targets. Consumer posts targeting the company over poor products, difficulties with cancellations and refunds, and bad teaching quality have been rampant on social media for quite a while now.  Lido Learning has closed its operations and fired almost all of its employees even after securing massive funding rounds from marquee investors like Alibaba and Anupam Mittal.  Invact Metaversity, co-founded by Twitter India CEO Manish Maheswari, has also been facing challenges. There was a tussle between the two co-founders and challenges relating to funding. The start-up had raised capital from investors like Kishore Biyani, BECO Capital, M Venture Partners, and Mohandas Pai. III. Decreasing valuation As discussed earlier, Paytm mall has lost more than 99.5% of its valuation, which shocked many, including the investors. However, the exit of early investors like the Alibaba group has allowed Paytm group to buy back its shares at a very low price. Zomato’s share has lost more than half of its value since the beginning of this year, wiping out thousands of crores (Rs. 88,000 Cr) of its market capitalization. Similarly, Nyka has lost around a third of its value since the start of 2022. Possible solutions Here are a couple of possible solutions that start-ups can follow 1. Switching from the hire and fire model to more long-term impact-creating models is an excellent way to prevent attrition. Start-ups often invest a large portion of their money on employee training which it needs to recoup from the employee down the line. This amount is effectively lost if the employee is laid off without the organization breaking even on the training cost. 2. Prioritizing business continuity and strategizing extensively on extending the business runway for start-ups. It seems that many start-ups are not able to judiciously utilize the funding they receive and go for business expansion without strengthening their core competencies. This should never be the case as it leads to the start-up overstretching its assets. 3. Change the business outlook from being focused on growth to focusing on profitability. Although growth is an essential aspect of the business, the importance of turning a profit remains as the proverbial elephant in the room that needs to be talked about. Well-known bootstrapped start-ups such as Zoho and Zerodha should lead the way for future start-ups. Conclusion As dire as the situation might seem, there is a lot of time and opportunities for the start-up ecosystem to introspect and change its direction for the better. There is an element of trial- and-error that is still going on in the country's nascent start-up ecosystem. With time as more founders and investors realize the role that profitability plays in business continuity, the better the outcome will be for all stakeholders involved.
  • 4. Sources-  https://img.etimg.com/photo/msid-88566226,imgsize-164267/Indianunicorns.jpg  https://newsonair.com/2022/05/07/india-gets-its-100th-unicorn-startup-total-valuation- reaches-332-7- billion/#:~:text=According%20to%20the%20ministry%2C%20in,total%20valuation%20 of%20%2418.9%20billion.  https://inc42.com/features/over-5600-employees-impacted-in-indian-startup-layoffs/  https://economictimes.indiatimes.com/tech/startups/cars24-fires-600-employees-across- various-departments/articleshow/91659360.cms  https://indianexpress.com/article/explained/explained-why-vedantu-sacking-employees- again-means-for-edtech-startups-in-india-7925818/  https://inc42.com/features/indian-startup-layoffs-tracker-13-startups-laid-off-8364- employees-in-2022/  https://www.bain.com/insights/india-venture-capital-report-2022/  https://inc42.com/buzz/paytm-malls-fall-from-unicorn-club-valuation-drops-99-5-to-13- mn/#:~:text=Later%20in%202019%2C%20major%20ecommerce,a%20valuation%20of %20%243%20Bn.  https://www.business-standard.com/article/companies/ronnie-screwvala-backed-startup- lido-learning-shuts-shop-workers-seek-help-122022300602_1.html