Although startups are resorting to layoffs With cost cutting as the main reason, the data shows that the total amount of financing of these new generation companies from January to April this year is basically the same as last year, and even more companies with more than 100 million US dollars. than last year. However, experts say big money is now slowing as the market environment continues to turmoil and startups are laying off staff to conserve cash to boost profitability.
About $12 billion was invested in growth and early-stage companies between January and April this year, compared with $11.2 billion a year earlier, according to Venture Intelligence.
Interestingly, the data shows that deals involving $100 million and above have also increased this year compared to last year. About 33 companies raised $100 million or more between January and April 2022, compared with 29 a year earlier, according to Venture Intelligence.
Hot Startups India Including Unacademy, Cars24 and Vedanta, more than 5,000 employees have been laid off in India this year. Ola cut about 2,100 jobs between January and March this year, followed by Unacademy (more than 600), Cars24 (600) and Vedantu (400).
In addition, e-commerce company Meesho cut 150 jobs, furniture rental startup Furlenco cut 200 jobs, influencer-led social commerce startup Trell cut 300 jobs, and OkCredit cut 40 jobs.
Ajay Malik, Managing Director and Head (Investment Banking Advisory), RBSA Advisors, said: “Given the current volatile market conditions, startups are aiming to conserve cash and improve profitability. Layoffs at startups may have been due to concerns over funding crunch. accelerate.”
According to the latest Venture Intelligence data, 33 Indian startups raised around $7.34 billion between January and April 2022. However, the India Tech Unicorns Report 2021 shows that only 11 companies have raised around $7.16 billion through public offerings in 2021. “One97 Communication (Paytm) raises India’s largest ever initial public offering The issue size is Rs 18,300 crore (approximately US$ 2.46 billion). “
Between January and April 2021, 29 deals worth $100 million or more accounted for about 71% of overall startup investment, while 33 such deals this year accounted for just 60% of total funding, the data showed.
RBSA’s Malik said that overall, the January-April funding this year was almost the same as last year, but compared to last year, the amount involved in the top deals was lower. “Falling valuations, slower funding rounds and smaller deal sizes are exacerbating the woes of startups,” he said, adding that a bleak market environment could slow fundraising in the near future.
Recently, Unacademy co-founder and CEO Gaurav Munjal said in a letter to employees: “We must learn to work within constraints and focus on profitability at all costs. (Funding) winter is here. We must change our way. Instead, we will focus on organic growth channels.”
He added that some are predicting this funding winter could last 24 months. “We have to adapt. It’s a test for us all. We have to learn to work within constraints. We have to focus on profitability at all costs…We have to get through the winter.”
Sequoia Capital Corporation Note
In a 51-page report, leading venture capital firm Sequoia Capital recently told founders of its portfolio companies that the era of high-growth returns at all costs is emerging as investors turn to companies that demonstrate current profitability. End quickly.
“Capital has become more expensive, and the macro economy has become less certain, leading investors to lower priorities and pay less for growth,” it said.
Sequoia also said loose monetary policy globally over the past two years has led to negative interest rates, making it easier to raise capital for growth companies and driving up valuations. Now, with interest rates rising, money is no longer free, which can have a huge impact on valuations and fundraising.
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