ET CONTRIBUTORSBy Aakriti Bhargava
It was late 2015 when godfathers of the startup ecosystem started retreating from India, which led to shrinking of funding channels. With several other factors at play, the startup world witnessed a drop in momentum. From Gurgaon to Bengaluru, the bedrock of investments vanished and reality turned into fiction.
Deals fell through, investors held on tightly to wallets and big startups withered and shut shop. Consumption was tamed and the blue ocean of opportunities turned into a river of blood as harsh realities surfaced. How exactly did Gurgaon fare in the brouhaha? Overall, the year saw a huge trend of M&A with a total of 123 deals and overall deal size of $534.9 million (disclosed value).
For starters, there was the massive sale in startups, where sharks ate other sharks. Flipkart acquired Jabong to dominate the fashion category and gave Snapdeal a hard time in creating an edge in any category and MakeMyTrip acquired Goibibo to give a hard time to the OYOs of the world.
While we are still unclear on the Zo-OYO deal and where that went, we do know that the company tried various business models and some of it saw credible success. While some sharks grew bigger, others couldn’t digest the changes and died a slow death. A former formidable force in flash sales ceased operations and let go employees without the world noticing too much.
Office spaces started shrinking. Over a talk with the cofounder of a well-known startup that had taken up a premium office on Golf Course Road, it was evident that there was immense pressure. They had a splendid 2015, with investments by one of the big guns of the ecosystem.
However, in early 2016, for the second fund raise, the big guns backed out, leaving them in a whirlpool of unsustainable, high operational costs. Office ‘niceties’ were not successful in retaining good talent. Through 2016, teams were fired, the product roadmap re-oriented and a couple of cofounders dropped out. Today, word is that the company is looking to move into a smaller facility.
It learnt its lessons as did several others that had taken a fancy route to attracting talent. Not just existing employees, even freshers bore the brunt. Till mid-2015, most Gurgaon startups hired with agility across verticals expanding categories. Then, hiring came to a screeching halt as VCs restrained investments and employees were shown the door.
A host of startups failed to meet their hiring commitments to reputed institutions. Word is that the communication to blueeyed freshers was done just a day in advance. I’m sure such decisions were hard for the startups and the future would see more prudence. The after-effect, clearly, is a huge surge in resumes on Naukri.com.
Following the freeze, land grab, a wellknown reason for expansion and taking on the huge burden of operational costs, was no longer sustainable. One player at the forefront of grocery retreated from various cities. The inside word was a resounding ‘yes’ to building one city at a time and doing it right.
Today, that startup is studying consumer varieties in each city and building the app – ground up – again. Every now and then in 2015, we had seen a rush of startups in every category. Led by IIT-ians in most cases, the idea was to dig gold in an opportunity that had seen massive success in the West. This ceased to happen in Gurgaon in 2015. Most such trends continued in Bengaluru.
However, riskaverse Gurgaon saw most IIT-IIM leaguers move back to their cushy corporate jobs. Will Gurgaon startups get a fresh lease of life in 2017? I think yes. 2016 was a reality check on the fundamentals of building a business. Consequently, a conscious, more prudent entrepreneur is looking at opportunities that Gurgaon needs.
(The author is co-founder of BoringBrands)
It was late 2015 when godfathers of the startup ecosystem started retreating from India, which led to shrinking of funding channels. With several other factors at play, the startup world witnessed a drop in momentum. From Gurgaon to Bengaluru, the bedrock of investments vanished and reality turned into fiction.
Deals fell through, investors held on tightly to wallets and big startups withered and shut shop. Consumption was tamed and the blue ocean of opportunities turned into a river of blood as harsh realities surfaced. How exactly did Gurgaon fare in the brouhaha? Overall, the year saw a huge trend of M&A with a total of 123 deals and overall deal size of $534.9 million (disclosed value).
For starters, there was the massive sale in startups, where sharks ate other sharks. Flipkart acquired Jabong to dominate the fashion category and gave Snapdeal a hard time in creating an edge in any category and MakeMyTrip acquired Goibibo to give a hard time to the OYOs of the world.
While we are still unclear on the Zo-OYO deal and where that went, we do know that the company tried various business models and some of it saw credible success. While some sharks grew bigger, others couldn’t digest the changes and died a slow death. A former formidable force in flash sales ceased operations and let go employees without the world noticing too much.
Office spaces started shrinking. Over a talk with the cofounder of a well-known startup that had taken up a premium office on Golf Course Road, it was evident that there was immense pressure. They had a splendid 2015, with investments by one of the big guns of the ecosystem.
However, in early 2016, for the second fund raise, the big guns backed out, leaving them in a whirlpool of unsustainable, high operational costs. Office ‘niceties’ were not successful in retaining good talent. Through 2016, teams were fired, the product roadmap re-oriented and a couple of cofounders dropped out. Today, word is that the company is looking to move into a smaller facility.
It learnt its lessons as did several others that had taken a fancy route to attracting talent. Not just existing employees, even freshers bore the brunt. Till mid-2015, most Gurgaon startups hired with agility across verticals expanding categories. Then, hiring came to a screeching halt as VCs restrained investments and employees were shown the door.
A host of startups failed to meet their hiring commitments to reputed institutions. Word is that the communication to blueeyed freshers was done just a day in advance. I’m sure such decisions were hard for the startups and the future would see more prudence. The after-effect, clearly, is a huge surge in resumes on Naukri.com.
Following the freeze, land grab, a wellknown reason for expansion and taking on the huge burden of operational costs, was no longer sustainable. One player at the forefront of grocery retreated from various cities. The inside word was a resounding ‘yes’ to building one city at a time and doing it right.
Today, that startup is studying consumer varieties in each city and building the app – ground up – again. Every now and then in 2015, we had seen a rush of startups in every category. Led by IIT-ians in most cases, the idea was to dig gold in an opportunity that had seen massive success in the West. This ceased to happen in Gurgaon in 2015. Most such trends continued in Bengaluru.
However, riskaverse Gurgaon saw most IIT-IIM leaguers move back to their cushy corporate jobs. Will Gurgaon startups get a fresh lease of life in 2017? I think yes. 2016 was a reality check on the fundamentals of building a business. Consequently, a conscious, more prudent entrepreneur is looking at opportunities that Gurgaon needs.
(The author is co-founder of BoringBrands)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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