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Looming VC Downrounds Signal An Upcoming Reset For Indian Startups

Looming VC Downrounds Signal An Upcoming Reset For Indian Startups

Indian startups ecosystem recorded 50% decline in funding amount raised in April compared to March and February

Over 80-90% of the Indian startups will witness up to 40% fall in their valuation, experts suggest

Foodtech unicorn swiggy marks 84% and 26% decline in the on-going round compared to last two rounds raised in December and June 2018

With the lockdown might have ended in many parts of India and restrictions eased in other cities, the fallout of the Covid-19 pandemic will have a prolonged impact on India’s economy. While the Centre for Monitoring Indian Economy estimates a whopping 100-120 Mn job losses due to the nationwide lockdown, International Labour Organisation in its ‘ILO Monitor: COVID-19 and the world of work’ has further estimated that with almost 90% of people working in the country’s informal economy, about 400 Mn workers are at risk of falling deeper into poverty.

As most continue to work from home and some gingerly make their way back to the office, almost every microeconomic and macroeconomic aspect of human life seems to be cosmically entangled with the Covid-19 pandemic.

In India, however, the Covid-19 pandemic’s noticeable spread happened only by March-end. The Q1 figures of Indian startup ecosystem do not really show the pandemic impact. According to DataLabs by Inc42, in Q1 2020, Indian startups witnessed 208 deals and raised $4.1 Bn compared to 171 deals and $3.2 Bn in Q1, 2019. However, if we look at the monthly data, the slowdown in terms of funding becomes crystal clear.

In April, this year, which observed a lockdown throughout the month, only $474.4 Mn was raised against $1.06 Bn in March’20 $1.1 Bn in February’20.