INSUBCONTINENT EXCLUSIVE:
entrepreneurs and may spook global investors
The consumer market in India is characterized by more than a billion people with fast-growing but still relatively limited spending power,
resulting in intense price competition that makes it harder for startups to reach profitability
highlights shortcomings in corporate governance, especially during a years-long startup boom that fizzled in early 2022
to capital to spend on acquisitions and expansion, with their venture backers more focused on growth than earnings potential
prominent startups that got entangled in recent scandals include fintech firm BharatPe, which sued its co-founder and his wife for allegedly
embezzling and misusing company money, and auto-services provider GoMechanic, which faced allegations of revenue inflation
such lapses rose, and this month, the US venture capital giant split off the unit into a separate firm.
Meanwhile, Prime Minister Narendra
to Samsung Electronics Co
are moving manufacturing to the country, while internet leaders Meta Platforms Inc
and Google are after its hundreds of millions of online users.
There are few signs, however, that startups are yet benefiting from that
A sudden decline in tech valuations last year, coupled with rising interest rates and slowing economies, caused venture capital firms to
slowdown in demand for online education services
universities and offices reopened
of Dusminute, whose app connects apartment-complex residents and office tenants with electricians and plumbers and lets users order
After relentless discounting by rivals made it hard to retain customers, the company decided to shut down and lay off its 200 workers late
It has now increased its staff to 250 people and expects to break even an an adjusted basis in July, he said
His company has raised about 240 million rupees ($3 million) and is confident it can soon raise a further 120 million rupees as investors
focus more on profitability and not just growth.
Disappointing high-profile market debuts, many of which were criticized as overpriced at
Digital payments giant Paytm went public in one of the most disastrous IPOs of all time in 2021, and still languishes at 60% below its offer
Like Paytm, the firms are still working to reach break-even.
The boards of many newly listed companies did a poor job pricing their IPOs,
and investors have been disappointed by their slow progress toward profitability since their debuts, said Pranav Pai, the founding partner
at Bangalore-based venture firm 3One4 Capital
Indian IPOs have raised just over $2 billion this year, a drop of 61% from the same period last year, even as the number of IPOs
Softbank Group Corp.-backed delivery firm Swiggy and ride-hailing provider Ola have seen their valuations reduced
Oyo Hotels, once touted as a revolutionary force in the hotel industry, has dropped by almost 80%
startups still seeking to break through in India
Dozens of unicorns are working to survive through the downturn and emerge as successes in the future
Several of them are close to an IPO, according to Pai at 3One4 Capital.
To win over investors, those upstarts need to have more realistic
IPO valuations than the companies that listed a year or two ago, Pai said
remains attractive, Bejul Somaia, a partner at Lightspeed Venture Partners, said in an essay posted on Twitter this month
But to seize the opportunity, founders and investors need to be disciplined, patient and prepared to play the long game, said Somaia, whose
