Startup Winter |
| Credit: New City Moving |
Y COMBINATOR'S REPORT
• Y Combinator, a Silicon Valley giant and early stage investor, recently warned its portfolio to "prepare for the worst" and said that a 13-year bull run was over
• YC also advised startups to decrease costs and concentrate on expanding their businesses
• "If you aim to raise funds in the next 6-12 months, you may be raising at the bottom of the recession," YC said, in a memo titled "Economic Downturn"
INDIAN STARTUPS
• Indian startup financing is also slowing, according to quarterly data
• From a high of $17.1 billion in Q3, the total declined to $14.5 billion in Q4 2021 and $11.8 billion in Q1 2022
• The most visible signs of the global downturn in India include layoffs and cost-cutting measures by entrepreneurs
• As well as corporate restructuring around growth sectors, resulting in additional downsizing
FUTURE
• Startups with a runway are realising that now is the time to focus more on unit economics, long term scalability, and business fundamentals
• This is something that unicorn entrepreneurs like Bhavin Turakhia of Zeta and Kunal Shah of CRED have spoken out about
CONSEQUENCES
• During this slowdown, the challenge for Indian entrepreneurs will be to reduce operations and cost structures
• And improve revenue models faster than the downturn catches up with them. Of course, we're already seeing a downturn in startup fundraising and valuations
• Companies like Ola have already accelerated their IPO efforts and cut off 2,100 contract workers from their fast commerce division. More layoffs are expected at other startups as well
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