The wheels are showing signs of slowing down in the startup industry and this is clearly evident in the way investors are pulling from the market and startups are struggling to raise cash. According to statistics, the amount of money invested by VCs has been going down for the last three-quarters continuously. The first quarter of 2016 were already down by 24% compared to December last year. Companies like KPMG have stated that Indian investment has continued to decline due to hesitation on the part of the investors. After the whopping 9 million dollars in the Indian silicon valley in the beginning of 2014, investment began to slow down, with investors being unsure to part with their money.

The bigger fish here is also struggling to find food. There have been reports that Flipkart and snap deal have had many meetings with potential investors for funding and none of the deals fell in place. There are various reasons for this slowdown. One major reason being that startup burning cash to give away discounts and lucrative deals and still not being able to generate a brand value or create loyal customers from their end.

The problem is not just limited to India, rather it originated in the USA and has come down from there. Startup deals in the US have also seen a drastic decline since the first quarter of 2015. Some reason for this that have come to light are Some of the factors driving VC investors to take a more measured investment approach include an economic slowdown in China, rising interest rates, and an approaching election in the US and a June referendum over the UK’s future in the European Union.

As if this wasn't enough trouble for the startups, the new regulations by the government are just putting that much more pressure on the startups here. Either the startups will have to get the stamp of approval or find new and innovative ways to get around them. The major three conditions attached by the government are . One, no group company or seller on a marketplace can contribute more than 25% of the sales generated. Two, marketplaces cannot influence product prices. Three, small sellers will now have to take responsibility for quality of goods and after-sales support.

With this slowdown, startups have started to keep a check on their spending habits and are saving money for the rough times to come. On this side where even the unicorns in India are struggling to keep it together there is no saying, what this storm will do the new and small companies which have started pretty recently.


Post a Comment

Previous Post Next Post
Like this content? Sign up for our daily newsletter to get latest updates.