Indian Startups Begin Rebounding with Cautious Fundraising Efforts
Indian startups are gradually seeing a resurgence in fundraising activities, albeit in a cautious manner. Several established startups have recently obtained funds or are in negotiations at either stable valuations or with significant reductions. Previously, companies like Byju’s, PharmEasy, ShareChat, Dunzo, Oyo, and Ola faced valuation declines ranging from 60% to 90%. This trend highlights ongoing challenges within the ecosystem and the careful stance adopted by investors in the current landscape.
Case Studies of Recent Fundraising
A prime example is the used car marketplace Spinny, which recently raised $131 million in a Series E funding round, maintaining a flat valuation of approximately $1.75 billion—unchanged from its last fundraising effort in 2021. Similarly, Euler Motors, an electric vehicle startup, managed to secure $24 million in its Series D round while keeping its valuation steady at $200 million from its previous round.
Preference for Stable Valuations
These instances demonstrate that an increasing number of startup founders are opting for stable valuations rather than aiming for higher ones, primarily to ensure they have adequate resources to continue operations. However, not all startups are navigating this phase smoothly. Content platform Pratilipi saw its valuation plummet by over 60% during a recent internal round, dropping from $265 million in 2021 to below $100 million now. This decline underscores the heightened scrutiny that investors have on monetisation strategies and long-term growth potential.
Notable Trends in the Startup Ecosystem
Startup Superb highlighted that Udaan, once a star of the B2B e-commerce sector, raised $75 million at a flat valuation of $1.8 billion. In a similar vein, Bellatrix Aerospace, a space-tech startup, is closing a new funding round at the same valuation as its previous raise, according to another exclusive from Startup Superb. Other companies like Blissclub, MakeO (parent of Toothsi), and Pagarbook are also securing fresh funds at stable or reduced valuations.
Fintech Developments and Market Trends
In a significant development, fintech unicorn CRED is in discussions to raise new funds at a valuation of $4 billion, down from $6.4 billion in 2022. Other enterprises, including Stanza Living and CityMall, are investigating downrounds as they seek additional capital. Moneycontrol reports that both companies are grappling with significantly marked-down valuations compared to their previous funding benchmarks.
Impact of Increased Scrutiny
Simultaneously, Good Glamm Group is also pursuing new funding at a lower valuation. These patterns hint at a more rigorous assessment of startup metrics, possibly indicating a larger shift in the investment landscape, particularly with capital being infused by Indian-owned entities. Startups with longevity, such as Oyo, CRED, and Ather, have suffered the most, suggesting that past optimistic projections may now be coming back to haunt these firms.
Market Dynamics Shifting
Moreover, the influx of volatility implies that projections spanning five or even three years are becoming less relevant for serious investors. This shift indicates that private markets are increasingly mirroring public markets after a brief phase where public markets appeared to reflect private outcomes with generous valuations for loss-making startups.
Looking Ahead
Consequently, this trend may spell more challenges for publicly listed and loss-generating entities like Swiggy. Meanwhile, the allure of going public is diminishing for others. Any delays in fundraising efforts will come with a greater cost, compelling many to confront two unappealing choices in the short to medium term.