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No More Free Money?

Updated: Jul 4, 2022

5 cards that sum up the current pulse of India’s Startup Ecosystem:

The geopolitical tensions due to the ongoing Russia-Ukraine war is causing inflation in prices of commodities, slowing down economies across the globe, including India, resulting into a pessimistic investment climate.

The hike in interest rates and tightening of monetary policies by central banks across the globe, especially by the US Federal Reserve, has led to a sharp decline of liquidity in the market, thereby slowing

down investments.

India’s new age tech stocks have performed miserably in 2022, wiping out investor wealth.

Price fall since IPO:

Paytm – 70%

Zomato – 66%

Policy Bazaar – 50%

Nykaa – 41%

  • Not just in India, tech stocks across the globe have witnessed major sell-off since the beginning of 2022. Resultantly, the world’s biggest tech fund SoftBank (SB) suffered an estimated loss of $18.6 Billion in Q1 2022, whereas US based VC Tiger Global Management (TG) has been hit by a loss of $17 Billion.

  • Why it matters? Both TG and SB were the top 2 most active VCs in India, having pumped in a whopping $3.8 Billion in 2021 alone.

  • In fact, both TG and SB are making major shifts in their strategies:

    • “This year the group will likely invest only half or even a quarter of what it did in 2021” – Masayoshi Son, SoftBank CEO

    • TG has reportedly told its investors that it would no longer focus on backing large, late-stage startups preparing to go public. Instead, the fund would focus on investing in younger firms in Series A and B rounds.

The big question

By this time if you have been able to connect the dots, we ask – Will India continue to witness ultra-bullish trends in Startup investments like 2021, or are these cards indicative of tougher times going forward?

This article is a part of the April'22 edition of our Startup Newsletter. Here's the complete publication:


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