Zombie unicorns – Indian startups go from feast to famine

They focused on a boom in Indian tech startups that raised a record $35 billion in new funding in 2021, but the tide has since turned as corporate governance concerns loom large for investors facing renewed uncertainty in global markets .

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With more than 60,000 startups in India, Prime Minister Narendra Modi called the current decade a “techade,” adding, “New unicorns are coming every few weeks.

However, April was the first month in more than a year that India had no new "unicorns," the term for startups valued above $1 billion.

Indian startups raised $5.8 billion in March and April, down 15% from the same period last year, data from Venture Intelligence shows.

At a recent private dinner in the southern tech city of Bengaluru, executives at US-based Insight Partners, which manages more than $90 billion in assets, told Indian founders that they would focus on more early-stage companies and invest less because of the global tech trend. , one participant said. Insight did not respond to a request for comment.

Many technology companies around the world have suffered in recent weeks as the Ukraine conflict and rising interest rates hit investor sentiment. Japan's SoftBank, which is India's largest technology investor with more than $14 billion in investments, posted a record loss of $26.2 billion in its investment arm Vision Fund.

November brought India's first tech IPO disappointment when SoftBank-backed payments app Paytm plunged 27% on its debut, prompting criticism that the company had overvalued without prioritizing profitability.

Paytm has fallen another 62% since then. And while Indian food delivery firm Zomato and cosmetics retailer Nykaa had blockbusters at the box office, their shares fell 67% and 43% from their peaks.

Three Indian startup founders said their investor recently told them that the days of easy money are over and they now need to show a clear path to profitability. The message, says one of the founders, is clear: "Prepare for the worst, hope for the best."