Indian startups settle for flat or lower valuations amid funding crunch

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Following an extended period of limited funding activity, Indian startups are beginning to raise capital once again, though in a measured manner. Several established startups have recently secured funding or are engaged in discussions at either flat valuations or with notable reductions. In earlier instances, companies such as Byju’s, PharmEasy, ShareChat, Dunzo, Oyo, and Ola experienced valuation cuts ranging from 60% to 90%. This emerging pattern reflects the persistent challenges in the ecosystem and the careful approach adopted by investors in the present environment.

Used car marketplace Spinny, for instance, recently secured $131 million in a Series E round but at a flat valuation of around $1.75 billion—unchanged from its 2021 fundraise. Similarly, Euler Motors, an electric vehicle startup, raised $24 million in its Series D round while maintaining its $200 million valuation from its last round.

These cases show that more startup founders are now choosing stable valuations over pushing for higher ones, mainly to ensure they have enough funds to keep going. But not everyone is getting through without trouble. Content platform Pratilipi saw its valuation plunge by over 60% in a recent internal round, falling from $265 million in 2021 to under $100 million now. This drop reflects investors’ sharper scrutiny of monetization models and long-term growth prospects.

Entrackr reported that Udaan, once a darling of B2B e-commerce, raised $75 million at a flat valuation of $1.8 billion. Likewise, Bellatrix Aerospace, a space-tech startup, is finalizing a new round at the same valuation as its previous raise, per another Entrackr exclusive. Blissclub, Toothsi parent MakeO and Pagarbook are also raising fresh funds at flat or haircut in valuation.

In a major development, fintech unicorn CRED is in talks to raise fresh funds at $4 billion, a decline from $6.4 billion valuation in 2022. Others like Stanza Living and CityMall are exploring downrounds as they seek new capital. According to Moneycontrol, both companies are facing marked-down valuations compared to their last fundraising milestones.

Meanwhile, Good Glamm Group is also eying a fresh round at a lower valuation.

These trends, while indicating the obvious, i.e. harder scrutiny of startup numbers, are also possibly a pointer to the bigger role of Money being invested by Indian owned and run entities. Startup vintage has also started to matter, as firms that have been around for a long time, notably Oyo, CRED, Ather etc have taken the biggest hits as past projections have come back to bite possibly. And then of course is the realization that we seem to be in a new era of heightened volatility, where five, or even three year projections have limited meaning for many serious investors. In other words, the private markets have started to resemble public markets now, after a brief period when public markets seemed to be mirroring private markets with generous valuations for loss making startups.

That might mean further bad news for publicly listed and loss making Swiggy ahead, even as the attraction of going public recedes a bit for others. But delays will come at a far higher cost now in terms of fresh fund raises, forcing many to choose between two unappetizing options in the short to medium term.

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