Start-up Failures Surge by 60% Amid Post-Boom Challenges

The data is from Carta and mostly North American companies.

Layoffs are happening at Sharechat starting today. Each division is being asked to join a call and they are being announced. First call with product org - around 50 folks were impacted

https://www.moneycontrol.com/news/technology/from-gomechanic-to-zestmoney-why-thousands-of-startups-shutdown-in-2023-11953691.html

-Online brands are expanding offline to achieve scale -Late stage startups are gearing towards profitability earlier than planned -Biz models built on behavior during Covid are struggling (like edtech) -Startups which got funded due to TikTok ban are struggling -Finfluencers are soon expected to struggle -Credit Fintech w/o NBFC license is a struggle -Very few consumer content startups frm India are seeing scale and profitability -RMG is struggling due to regulations -India focused creator economy startups finding it difficult to scale -PLG led Indian SaaS startups not able to cross $20M ARR -Some VCs finding it tough to raise without DPI -Public markets thrashing innovative/vanity metrics of pvt VC funded cos. and their pvt market valuations -Series B and beyond is tough, down round/flat round is now common - Deals happening at single digit ARR multiple for SaaS valuations - Web3 startups not getting funded - Most GenAI startups not able to build any defensibility - Most B2B Commerce startups are not able to increase gross margins or reduce NWC - CACs are ever increasing - Compliance issues at many startups - Layoffs to continue - startups which got funded in 2021, will soon be out of runway - no liquidity event for vested ESOPs in most Indian startups - secondaries happening at 35% discount in some cases - deal closure times have become 2x - less FOMO amongst VCs - More instances of M&A falling through

Being an investor in equity markets, i was aware of the fact that US market will crash as the free money by fed draws back. I obviously was not able to link this up with the funding dry-ness. I still expect a founder to be aware of these economic events. I am curious how could the management decide to go for hiring employees only to lay them off a year later. If you are a founder, would be happy to know the other side of the story.

COVID level hiring which happened till mid of 2022 was exceptional and will never happen again. But precovid situation was much better than now. If any of you are experienced and know industry in depth can you tell me when precovid level of hiring again begin?

Quoting from The Ken (which btw I would highly recommend). How many of you think this is true for Bangalore and problems that we are facing now with this generation. +++++++++++++ Between 2020 and 2022, investors pumped billions of dollars into startups whose founders and leaders offered up the mythical “hypergrowth” narrative. Those startups, in turn, pumped money to hire and grow a layer of mid-level and senior-level executives whose job was to deliver on that hypergrowth narrative. And salaries went through the roof. Hikes of 50% and above were par for the course. Cut to the present. If overvalued startups are widely recognised as a problem, can overvalued employees escape the same fate? A CEO of a prominent company estimates that “in product and tech, 20-30% are in this category”. - Extract taken from Ken