Year Ender 2023: Startups struggling with lack of funding, hope to do better in the new year – year ender 2023 startups struggling with lack of funding hope to do better in the new year – StartUp News

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Year Ender 2023: Lack of funding and problems related to corporate working practices affected the country’s startup sector in 2023, causing venture capital investment in the sector to decline to only around US$8 billion. Investors expect strong growth in the maturing startup ecosystem in the new year.

Education and health-related technology platforms, which grew rapidly during the global pandemic, faced financial uncertainties this year. Many companies closed their business. Market valuations of major companies like Byju’s and PharmEasy declined by 85-90 per cent.

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Indian startup laid off more than 15,000 employees

According to an estimate, Indian startups may lay off more than 15,000 employees in 2023. Startups with sustainable business models as well as well-capitalized startups are expected to sail through the current turmoil. 2024 may be a ray of hope as well as “challenging” for them.

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Startups expected to do better in the new year

According to venture capital firm Lightspeed, a two-year high or low cycle doesn’t really affect companies that have stood over an 8-10 year period. Venture capital firm Lightspeed has invested in companies like Byju’s, MagicPin and Oyo.

“Thus, we consider the current situation as a part of the growth of our ecosystem,” said Rahul Taneja, Partner, Lightspeed. There will be consolidation, valuations will improve and even some companies will shut down but overall there will be growth in the end.”

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Venture capital investment declined to $8 billion

Apoorva Sharma, managing partner, debt fund Stride Ventures, said that in general all lenders have been extremely cautious and the primary focus has been on ensuring asset quality. “The average size is already in the range of around Rs 20 crore, which was around Rs 45-50 crore in 2021,” he said. If you look at venture capital investment, it will be around US$ 35 billion in 2021, around US$ 25 billion in 2022. This will be around eight billion US dollars in 2023. It is declining every year.” At the same time, the number of unicorn companies has also declined.

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Decline in the number of unicorn companies

According to venture capitalist company Fundamentum Partnership, the number of unicorns dropped from 110 to 72 by November this year. “By November 2023, there were 72 unicorn companies in India, compared to 110 last year,” said Prateek Jain, Principal, Fundamental Partnership.

Vikram Gupta, Founder and Managing Partner, IvyCap Ventures, said that around 30 unicorns saw a change in status between 2021-2023. Lightspeed’s Taneja believes that 2024 will be exciting and challenging for both the segments.

First Published – December 28, 2023 | 3:03 PM IST
(Business Standard staff has changed only the headline and photo of this report; the rest of the news has been published without any changes from a shared news source.)

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