Between 2012 and mid-2015, the Indian startup industry was on the cusp of a boom. Fortunes seem to have suffered a reversal since. This year, the sector was seen hobbling from one mistake to another.
At least, that is the impression that headlines in Indian business media created. There was a time when every achievement of India’s tech startups was heralded as a mark of their perfection; now, every failure—from firing to hiring—is taken as a sign of an impending collapse.
Here’s the story—told through news headlines—of the Indian startup community’s transformation from a rock star to a rickety boat:
In May 2015, media declared that India, where the startup boom was less than a decade old, was home to eight startup unicorns (companies valued at over $1 billion). The following few months were all about celebrating this exotic title:
The celebration, however, did not last long. By the end of 2015, the sky-high valuations were appearing to be hollow.
Is the bubble bursting for India’s online startups? — questioned Agence France-Presse in November 2015.
And the negative coverage increased in 2016:
Until early 2015, several new investors were looking to bet on the country. For instance, Google Capital was reportedly considering opening an India office—its first outside the US.
The investment sentiment stayed upbeat through the year, with some significant rounds:
Snapdeal valued at $4.8 billion after raising $500 million fresh funds —Mint newspaper reported in August 2015.
2015 was the biggest year for Indian Startups —The Hindu newspaper wrote in January.
What bubble? Indian startups have had a banner year — Quartz reported about a 40% on-year increase in funding in 2015.
Today, finding investors is not easy. Flipkart and Snapdeal are struggling to raise funds at their preferred valuations.
In 2014-15, when other industries in India were going slow on hiring due to macroeconomic reasons, startups were hiring in bulk.
But by the end of 2015, many began questioning such hiring, eventually leading to layoffs. November and December saw a bloodbath among Indian startups, with some of the top firms sacking hundreds of employees each.
In March 2015, Flipkart hired Silicon Valley veteran and former top Google executive Punit Soni. The development was seen as a milestone for India’s startup sector, as it highlighted its ability to attract global talent.
Flipkart’s new Silicon Valley hire shows India’s startup scene is really taking off — TechCrunch’s headline on March 4, 2015.
Soni was not the only one to relocate from the Valley to India. Several others quit high-profile jobs in the US to work with technology companies in India.
This was seen as the beginning of a “reverse brain drain” or ”brain gain” for India. Many said the technology talent that had fled India in the 1980s and 90s due to lack of opportunities would now find its way back.
Reversing the brain drain—Indian startups woo back talent from abroad — a post on coupons portal, Cashdealkart.com, in May last year.
But less than a year since this trend began, it was stuttering.
Top level shake-ups at Flipkart continue: Now, chief product officer Punit Soni quits — Firstpost’s headline on Apr 14, 2016.
I can see other people also exiting India around me: Punit Soni — The Hindu on May 23.
India’s Snapdeal loses key Silicon Valley vet Anand Chandrasekaran as it battles Amazon — said a May 24 headline on Recode.
Have start-ups benefited from expensive Silicon Valley recruits? — questioned Mint.
Not so long ago, Indian startups—flush with funds—were focused on rapidly expanding into new cities.
But, in recent months, scaling up has given way to scaling down: