Why India’s start-ups are finding it hard to get money despite booming economy
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Indian start-ups are facing difficulties in securing funding despite the booming economy. Investors are becoming more cautious and cutting smaller cheques due to previous failures and declines in valuations. In January and February 2024, Indian start-ups raised about $900 million, signaling another slow year after a six-year low of $8 billion in 2023. The drop in funding for Indian start-ups last year was steeper than that of US and Chinese start-ups. Start-up funding has a broader economic impact, as start-ups have generated 20-25% of India's new jobs and 10-15% of its economic growth in the last eight years. The decline in funding can be attributed to the sharp turnarounds in fortune for companies like Paytm, Byju's, and Ola Cabs. Valuations have plummeted, and investors are now more focused on potential profitability and stable bricks-and-mortar businesses. Some venture capital firms are broadening their investments beyond tech start-ups to capture a larger portion of the economy. SoftBank, which previously invested $11 billion in Indian start-ups, is considering deploying up to $300 million in India this year after a two-year hiatus.
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