The startup euphoria is due for a reality check. A dry spell of funding has slowed the growth of startups, with many humble businesses opting for belt-tightening measures. According to a report published by a national daily, small businesses are feeling the aftereffects of the recession, with funding dipping to below $30 billion last year from a high of nearly $40 billion in 2021.
Vamshi Krishna Reddy, a partner at Kalaari Capital, was quoted as saying that while companies weren’t shutting down, the “cycles of raising capital, moving on quickly to the next round, has kind of slowed down.” Giving her perspective on Venture Capitalist (VC) firms that provide funding to new businesses, she said that VCs were looking at the fundamentals of companies and founders closely.
“I think there has been a little bit of a lull before January. But now the momentum is back. Deal flow is coming back and has picked up this quarter. We are seeing more and more founders coming with the right kind of metrics,” she said giving her perspective about the new quarter.
Reddy reminded that businesses were shifting towards emerging technology. Businesses, she said, had no choice but to adapt. She said, “A lot of traditional businesses are getting migrated into new-age technologies. So, understanding that is not a simple process. It is all learning, which is coming back to the ecosystem now, and it is going to get better. We are not as mature a market as the West. We are a developing market.”
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