How companies come to market is set to change in response to the losses from public offerings
Save time by listening to our audio articles as you multitaskThat leaves plenty that do not. Since the beginning of 2021, the number of unicorns created in India has risen from 40 to 108. Only America and China have produced more. In 2021 promising startups had no trouble finding investors eager to fund fast-growing firms with big ideas. That year investment in startups tripled to $35bn. The momentum continued in 2022, with $3.7bn invested in March alone.
The poor performance means that other planned listings, such as that of PharmEasy, an online pharmacy, will not now go ahead. Acquisitions have been similarly hit. In October the $4.7bn purchase of BillDesk by PayU, both profitable payments companies, was cancelled.
In response to the tougher environment, costs are being cut. Inc42, an online publication tracking startups, counts 20,500 layoffs over the past year, probably foreshadowing a much bigger wave. Edtech has been especially hard hit, with 16 companies axing over 8,000 employees, the most coming at Byju, India’s most valuable startup, which is sacking 2,500 employees.
Byju has other problems. It was accused in July of inappropriately aggressive accounting and sales policies, which it denies. Other startups have also come under fire. BharatPe , Trell and Zilingo saw founders quit last year after fraud accusations. BharatPe’s founder denies the allegations as does Trell; Zilingo is investigating the claims.
These tribulations have brought the role of backers into question. Were firms sufficiently monitored? Were valuations credible? Sequoia Capital, a prominent Silicon Valley firm, has invested in GoMechanic, BahratPe, Trell, Zilingo and several edtech companies. It acknowledged in April the governance issues in various holdings and vowed to provide stricter oversight but has declined to comment further.
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