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Down Rounds Season At India’s Unicorn Club

Inc42 · 7m

Indian startups, including unicorns like Meesho, Udaan, Sharechat, Pharmeasy, and BYJU’S, are experiencing deep valuation cuts and down rounds when raising funds. This trend is indicative of the challenges faced by growth and early-stage startups to show strong financial performance and secure higher valuations. While some startups resist deals due to lower valuations, the reality is that many are settling for lower valuations aligned with their revenue and accepting dilution. The overall funding for Indian startups dropped by 33% YoY in Q1 2024, reflecting a cautious approach from investors who prioritize revenue generation and cash flow. The impact of down rounds extends to employees' equity, company image, and market perception. However, there is optimism that normalcy may return in the second half of 2024 with flat rounds or even higher valuations as startups focus on improving unit economics and profitability.