India's Unicorn Party Over? | Funding Crunch, Job Cuts & Shutdowns | Ep.4 Deshbhakt की खुदाई! - YouTube

India's startup story was discussed world over. Can't say much on other masterstrokes but startups have rocked.

Thousands of startups formulated in 2021 and unicorn every other day, valued at $1 billion.

Last year we achieved 100 unicorns. So many startups achieving the dream of making it big.

It was a matter of celebration, for founders and venture capitalists, a large untapped market size to grab.

New company founders are hoping to become unicorn one day. It's a coveted milestone.

Government also praised it, took credit for huge success of startup India.

Any political party would have taken credit of the achievement.

However, most recently, startups are facing the heat of 2022 and government quietly watches.

For example health-tech startup mfine (valued $500 million) fired 75% workforce, 600 employees impacted overnight.

Cars24 also fired 600 employees. Gaming unicorn MPL expelled 100.

Zomato-backed firm Blinkit has laid off 1600 from staff.

Similar story in Edtech space.

As well as venture capitalists and funds are saying 'Winter is coming.'

Basically 'prepare in advance' for bad days. Trim the cost to company and survive.

15 companies became unicorns in April-May 2021 whereas in 2022... Google it and write in the comment section.

In other words, funding shortage may shutdown companies that are low on cash, have no profits and viable business model.

60,000 could lose their jobs.

It is not entirely government fault (just like it was not entirely govt responsible for making 'em unicorns)

Then who is the unicorn party pooper?

Prolonged pandemic has led to supply chain disruption and Russia-Ukraine war has caused energy crisis.

There was excessive eagerness to bounce back in 2021 whereas in 2022 there is increased disinterest in the market.

Central banks launched most widespread rate rise in 2 decades.

Earlier more money was printed to beat the effects of pandemic. But it also led to inflation.

Now to stop sky-high inflation, interest rates are hiked. So less money with venture capitalists.

Venture capitalists put money in startups to get high returns on investment.

But only 23 of India's 100 unicorns are profitable. What about the rest? This is called fakeeri pro max.

So no easy money for startups.

Unicorns that listed in the stock market were overvalued. What is their business model and profitability?

Today, listed unicorns have lost value up to 70% in the market. Other unicorns don't want to IPO.

And maybe the number of unicorns is less than 100 because several have lost value.

Example: Paytm mall valued at $3 billion in 2020 but 2 weeks ago Alibaba and Ant left and valuation dropped 99.5% to only $13 million.

This is the bubble of startup ecosystem. Now other unicorn bubbles may also bust any time.

Startups require $10-15 billion funding for next 6 months but funds will fall short of this. Next 1 year is testing time.

Good news is that high quality talent will get new job in time. Every company wants experts trained in AI, data science, machine learning.

Question is, how did these startups garner so high investments? What happened to astute judgment of venture capitalists?

140 crore population is a huge number. This makes us the largest marketplace. That is why FB, Twitter, YouTube have most numbers from India.

But purchasing power is limited to smaller numbers. Nikhil Kamath of Zerodha explained that 9 cr people have demat of 140 cr people.

Venture capitalists are told that this number should increase from 6% to at least 25%. Eyeing great potential they write big cheques.

Kamath says that of 9 cr demat accounts, only 3 cr have investments greater than 10,000.

These numbers are low despite more new people entering, more Ads, more content related to market.

Once again that point: Only 3 crore have invested >10,000 via demat accounts of 140 crore population.

This is as shocking as 25,000 earning person in the top 10% earners. Fintech companies are after this group? They can barely make ends meet.

We see big numbers like GDP, net worths of Adani-Ambani, etc. and feel satisfied. We don't see the big picture, state of common man.

In this market, social media content aggregating platforms do well, content is always free.

Less news of unicorns in the coming days. No big investments any time soon for unicorns. They have to prove their business model.

So far the mantra was numberof sign ups or app downloads now the rules are different.

Companies that can show profitability and long term business model will secure more funding.

The unicorn party is still not over, it is only toned down a little.

Not only funding, startup founders are fleeing to Dubai, UK, USA, etc. for better startup environment.

A while back 30% tax was introduced on virtual assets and 1% TDS on buy/sale. This is why web3 innovators switch to Dubai.

This migration is called flipping away. Founded here, registered elsewhere.

Piyush Goyal urged startups to incorporate and list in India. All problems will be sorted.

Startups and unicorns are good for newspaper headlines but they don't solve existing problems.

Startups should be looked after and appreciated. But time to also focus on very small businesses that are profitable.

Government should focus more on small and medium scale businesses. Valuation is not everything. Purpose is equally important.

Some startups solving water crisis may not become unicorns but they're addressing real problem. They should get government backing.

Rising entrepreneurial spirit needs minimal government interference. 100 unicorns a year is also possible that too without foreign funding.

But the year is going to be harsh for startups.

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