In News: With funding starting to dry up, the startup ecosystem in India is bracing itself for a “long and bitter winter”.
Potential mass lay-offs in the next 12-18 months, particularly in sectors such as ed-tech and gaming that got a significant push during the pandemic
Industry estimates peg the cumulative job losses in startups at over 10,000 so far this year
A slew of factors have led start ups here, including the Russia-Ukraine conflict, supply chain disruptions, consequent inflationary pressures, and rising cost of capital, amongst others.
Central Banks around the globe are raising interest rates curbing excessive liquidity in the economy, which is squeezing out funds for the start-ups.
Challenges in fund-raising
The global slowdown and tightening monetary conditions will likely add to investors’ uncertainty and situation may not improve till the US economy revives.
However, India-focused start-ups may have a better value and revival will be higher in the days to come as India is expected to bounce back shortly.
All these challenges may succumb to a sharp correction in valuations, forced mergers and acquisitions, and a decrease in venture capitalist funding.
However, this may also help stronger companies and genuine start-ups with a better product to emerge from the crisis.
