In India, every second person wants to become an entrepreneur. Startups are the way to realise this dream and it is no coincidence that we had emerged as the world’s third largest startup ecosystem with over 1.25 lakh startups and over 110 unicorns.
The trajectory in the last 18 months has seen a slowing down of this dream. There has been a fall of revenues and a corresponding funds squeeze, putting many well-established and nascent organisations under pressure. The squeeze began being felt from early 2023.
Several startups have had to close shop while many of the more successful ventures now find themselves struggling to stay afloat. In 2023, there has been a nearly 73% decline in fundraising. Investments in these companies which slumped to $ 7 billion as compared to $ 25 billion the earlier year.
According to Traxcn Technologies, India dropped to fifth position in 2023 amongst the highest funded nation from being ranked fourth in 2022 and 2021. An executive working in a startup supplying trained manpower to NGOs said, “Investors are no longer writing cheques in a hurry. Ours is an all-women venture and we have already spent Rs 1 crore with funds being raised by the team members at a personal level.
But when we approached a venture capitalist for funding, we were informed that we needed to raise our company to a higher level before they would consider us.” The other problem is the government’s decision to tweak its Foreign Direct Investment rules which have created u.
