Investors’ sharper scrutiny of monetization models and long-term growth prospects seems to have become the new normal.
Chennai: Several startups that raised funds recently have seen flat valuations or notable reduction in valuations.
The careful approach adopted by investors have seen valuations of several start-ups coming down.
While unicorns like Byju’s, PharmEasy, ShareChat, Dunzo, Oyo, and Ola experienced valuation cuts ranging from 60 to 90 per cent in 2023 and 2024, lower valuations are becoming a new normal for all startups approaching the investors.
Used car marketplace Spinny recently secured $131 million in a Series E round but at a flat valuation of around $1.75 billion—unchanged from its 2021 fundraise, according to Entrackr. 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.
Content platform Pratilipi saw its valuation plunge by over 60 per cent in a recent internal round, falling from $265 million in 2021 to under $100 million now.
Udaan, once a darling of B2B e-commerce, raised $75 million at a flat valuation of $1.8 billion. Bellatrix Aerospace, a space-tech startup, is finalizing a new round at the same valuation as its previous raise. Blissclub, Toothsi parent MakeO and Pagarbook are also raising fresh funds at flat or haircut in valuation.
According to Entrackr, 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 lower valuations for new capital.
“The exuberance we saw in the funding market in 2021 was an anomaly. After the funding winter, investors are not in a hurry to close deals. While large investors like Tiger Global and Softbank have kept away, investors do not have any fear of missing out. Apart from a bunch of early-stage investments where valuations do not matter, investors are selective about startups looking for subsequent funds,” said Arun Natarajan, founder, Venture Intelligence.
Further, investors are realising that in a new era of heightened volatility, five, or even three-year projections have limited meaning. Investors’ sharper scrutiny of monetization models and long-term growth prospects seems to have become the new normal.
