Nobody said running a startup was easy. A startup’s life is marked by the thrill of the heady highs and rough lows. Of late, the Indian startup industry hit a bottleneck, with funds drying up, as investors have become more cautious about where to park their funds.
It has been a roller coaster ride like the game of snakes and ladders, with the thrill of the climb in the past of couple of years and the sudden rude slide down since the last few months. The dice is clearly not rolling in the favour of startups, with investor interest and valuations reflecting a clear lack of confidence in their capabilities. More than one startup is feeling the bite of competitors at their heels gobbling them up by way of mergers and acquisitions. They have been dumped in the troughs of low valuations and need a lot of luck to roll the dice in their favour and get back on track.
The luck-based game of snakes and ladders has done more harm than good
Snakes and ladders is pretty much a game of luck, where one roll of the dice decides your fate. In a single move, you can either climb to the top, or come rolling all the way down with one wrong move.
This is how the startup game too has been playing out so far, with a lot depending on how lucky start-ups have been with getting funding. While the ones who have managed to raise funds were able to surge ahead, many of the same startups, when unable to raise the next round of funding, have seen the coin flip and come crashing down without warning.
For instance, the golden era of the Indian startup industry has been ruled by the likes of Flipkart that has raised around 3.2 billion so far and created history. Their high GMVs and famed sales regularly made headlines and have been the toast of the town in the past. In 2015, the company was valued at $15.2 billion and was on a winning streak.
However, its valuation has now been rolled down to $10 billion; the 4th devaluation in a row. Flipkart is not alone in hitting the lows. Zomato’s valuation in May 2016 was slashed down by half and Snapdeal has been struggling to raise more funds too. The likes of Jabong were snapped up at a fraction of their old valuations by Myntra from a projected $250 million to $70 million. Quite a few like Fashionara, PepperTap, AskMe, Zippon, Exclusively, TaxiForSure etc. even bowed out of the game and shut shop in 2016.
Flush funding early on has played a large role in the snakes and ladder scenario due to a dilution in the controlling stakes of the founders, and hence, the investors called the…