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Starting Trouble: A Dull Investment Climate For Start-ups

Amidst the growing cacophony of e-commerce start-ups announcing plans to raise capital, what goes unnoticed is the fate of many others that struggle to mop up funding after the initial seed round.

The past 6-8 months have witnessed a complete slowdown in the investment climate as the euphoria created by large American hedge funds and PE firms — which entered the VC space and signed huge cheques for Indian start-ups upwards of $50-$100 million, from end 2014 to mid 2015 — eventually dried up.

Sanchit Vir Gogia, Chief Analyst, Greyhound Research, pointed out that investor confidence weakened as start-ups could not achieve what they had promised to deliver in terms of huge spikes in user-base growth, revenue growth or profitability milestones.

“Then, there are a lot of me-too start-ups floating around with little or no differentiation to offer, which need to rehash their business models to suit Indian consumers and conditions, before they can attract any amount of investment,” noted Gogia.

Source: The Hindu Business Line

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