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Last updated: 12 Jul, 2022  

Rupee.9.Thmb.jpg Startup funding winter

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Bikky Khosla | 12 Jul, 2022

Union Minister Jitendra Singh last week appealed all government agencies to reach out potential startups in the country and extend a helping hand them, adding that today the Indian startup ecosystem is not confined only to big cities only but spread over Tier-2 and Tier-3 cities from different states. Another minister, on occasion of the launch of ‘Digital India Week 2022’, said that startups and unicorns are now the “new drivers of the digital economy”.

It is true that Indian startups have witnessed a rapid-growth phase during the last few years, and no doubt, enabling policies of the government have immensely contributed to this growth, but recently there are some concerns around them, fuelled by several global macro-economic factors, and in the background of this, according to experts, the government should step in with new supporting measures for the sector, the long-term potential of the sector is still excellent.

Some recent reports show that startup funding fell nearly 40 percent in the April-June quarter. Prior to this, the sector had seen about $10-11 billion worth of investment per quarter against about $6-7 billion now. Global investors are jittery due to multiple factors like the ongoing Russia-Ukraine war, ballooning inflation driven by high crude and commodity prices and stock market falls across the globe. Experts warn that this situation may continue in the next 12-18 months.

Amid this concern, Indian start-ups—including several unicorns—have now started handing pink slips to their employees, with nearly 12,000 startup employees losing their jobs in 2022. Economy watchers point out that more than 60,000 can lose their jobs this year alone. According to experts, the ratio of laying off is concerning, considering the fact that funding is still flowing in the startup ecosystem, though at a slower pace.

I invite your opinions.

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