The decline of startups in India

More than 6000 people have been laid off from startups in the last 5 months of 2022. Whether it’s Unacademy or some other startup, employees are being left out of companies left and right.

 

But this wasn’t the case in 2021, was it?

 

In fact, despite the pandemic, 2021 saw more than 40 companies going unicorn. There are many reasons for the same.

 

Firstly, as we covered in our previous two newsletters, the economic condition of the country isn’t exactly the best right now. India saw a surge of foreign investors parking their money into the startups here. This boosted the economic situation of the country significantly.

 

Startups in India burned through this cash quickly. Be it the marketing or sales, everything was ‘improvising’. However, it wasn’t soon before everybody hopped on the bandwagon of promoting their brand, and people were overwhelmed with the presence of so many new businesses around them.

 

Then came the Russia-Ukraine war. Then came the rise in oil prices followed by an increased cost of living and inflation. A shortage in supplies and overall capital calls for withdrawing your money as an investor. And it wasn’t long before investors started backing out of the Indian startup ecosystem.

 

The worst part is that not only did it happen in India but in other countries as well. Netflix is a living example of that.

 

This explains the unannounced layoffs and the decline in the startup culture in India.

 

But to think that this is the end isn’t exactly true as well.

 

See the thing is, investors and businesses are very much aware of the uncertainties before they decide to make deals together. A promising business that sells the narrative of growth on its own rather than just having a cushion as investor money to fall on may again find investors pumping their money in it.

 

The noise in the startup sector isn’t exactly a bad thing. It’s more of survivorship. The ones that make it out towards the end of the tunnel will again be approached by investors with money and opportunities to grab.

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