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Saturday, June 18, 2016

Why Are Startups Losing Valuations?

There has been a barrage of not-so-good news for the startup community, with funds flow ebbing and investors toning down their expectations. Morgan Stanley Institutional Fund Trust Mid Cap Growth Portfolio, Fidelity Rutland Square Trust Strategic Advisers Growth Fund and Valic Company I Mid Cap Strategic Growth Fund have marked down the value of their investments in Flipkart. On the other side, Zomato too was marked down by HSBC. RBI Governor recently remarked, “If the only reason you are getting revenues, not profit, is because you are selling based on 50 per cent discount, it can’t be viable in the long run.”

It is not only the unicorns that have taken a hit; the flow of capital has taken a beating across the board. The aggregate deal value in India decreased by 16% q-o-q in Q1 2016. During the same period, the number of deals increased by 108%. Read together, it implies that the era of mega deals is on hold, if not over. Investors are no more interested in throwing money at any tech idea, which is not necessarily a bad thing. The newfound prudence might prevent a dot-com like meltdown this time.

Indian tech scene is known to have closely followed the tidings in the Silicon Valley and the current trend is no different. Find a detailed account of what’s going on and what the experts are thinking here. The startup story is far from over. But the key take away is that a good tech idea becomes a viable enterprise only when mixed with business acumen and DIY may not always be the best approach. Seek assistance where needed. Let us know your requirements and we can help you in not only in achieving your targets, but also in setting the right goals. Know more at www.eurionconstellation.com or drop a line at contact@eurionconstellation.com.

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