In 2014, Prayank Swaroop made a pitch to the storied venture firm Accel, where he worked as an associate, about future marketplaces in India. Swaroop, now a partner at the firm, turned out to be right.
But as the local startup ecosystem closes one of its toughest years, it’s now staring at another question that it has long been able to brush off as benign: exits.
About half a dozen consumer tech Indian startups have gone public in the past year and a half and all of them are performing poorly ...
...on the local stock exchanges. Paytm is down 60% this year, Zomato 58%, Nykaa 56%, Policy Bazaar 52%, and Delhivery 38%.
Those looking to push ahead with their plans to go public will face another obstacle: Several global public funds including Invesco that ardently finance the pre-IPO ...
...rounds are retreating from the Indian market after getting hammered in China and other emerging markets this year, according to people familiar with the matter.
But even those exits are getting harder to come by. An analyst at one of the top venture funds in India said that for a ...
...long time VCs who backed early-stage SaaS startups at sub-$25 million valuation stood a chance of making good exits.
II.
The vast majority of Indian investors were too late to make investments in the web3 space.
The Reserve Bank of India is also increasingly scrutinizing who gets the license to operate non-banking financial companies in the country in moves that has sent a shockwave to investors.
An investor described the trend as a “hedge” against fintech exposure. Indian startups raised $24.7 billion this year, down from $37 billion last year, according to market intelligence firm Tracxn.
The funding crunch and the market dynamics prompted startups to let go of as many as 20,000 employees this year.
But many star unicorn founders are unwilling to take a haircut in their valuations, in part because they believe that will drive some talent away.
“2022 started off strongly, and it seemed for a while that the Indian venture funding market would be subject to different gravitational forces than U.S. and China, which were seeing dramatic declines, ...
...but this was not to be. The Indian market eventually turned out to be subject to the same macro headwinds as the U.S. and China venture market,” said Sajith Pai, an investor at Blume Ventures.
“The decline was led primarily by growth funds pausing investments because the multiples in private markets were rich compared to their public peers, and the weak unit economics of the growth stage companies.”