Sagorika Ghosh
Product Manager, Morningstar
On one hand, Swiggy has earned its place after spending the last decade quietly focusing on
disciplined execution. In recent conversations (IPO era), I’ve heard sentiments like, "Isn't this great news? It's a positive development for the tech ecosystem." But is it really?
The reasoning behind this is that the public listings of companies like Zomato, Swiggy, Paytm, and others represent a net positive for the startup world. Such moves are believed to inspire more entrepreneurship and to reassure startup employees that significant outcomes are possible. The idea is that these events create wealth and seeing ‘crorepatis’ emerge from liquidity events like IPOs or acquisitions encourages others to follow suit.
Just look at how SEBI and 328 shareholders helped turn India's stock market into a record-setting force, minting India’s priciest stock in a single day.
However, over the past two years, the venture capital landscape has shifted. The once-rapid pace of startup funding, which saw a new unicorn emerge every few months during the ZIRP (Zero Interest Rate Policy) era, has slowed dramatically. We've seen a wave of layoffs, company shutdowns, and down rounds. Venture capital funding in 2024 is down 7% year-on-year, according to Tracxn.
This isn’t due to a shortage of capital—funds are plentiful—but because the rate of investment has drastically slowed. Founders who once burned through their raised capital to capture market share are now rethinking their strategies, especially as AI and large language models (LLMs) make building and scaling companies more affordable.
Venture capitalists (VCs) have become more cautious, taking a step back and reconsidering their investment strategies. The biggest change? A shift towards profitability. While we've seen some significant fundraising rounds this year—like Zepto, Rapido, and Meesho—overall funding is still far below the highs of previous years.
As the venture capital world gradually returns to a semblance of "normalcy," it's time for introspection. Should VCs reconsider their past approach, particularly the "grow or die" mentality that has dominated their thinking? After all, VCs are not typically the most optimistic; it's the founders who bring that energy. VCs must balance multiple bets, hoping that a few of them yield the outsized returns necessary to fuel future investments and keep the cycle going.
One key theme emerged: governance. Startups aren’t exactly known for strong governance, and this isn’t surprising given that many have been laser-focused on growth at any cost.
Sources: ET, Mint
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