Is there a real slow down in Startup Funding?

The answer could be a yes when compared to 2014 and 2015. Where it was about 7.1 Billion USD and now we are not even sure of reaching half of it.

According to Traxcn data, Indian tech startups have raised nearly 959 million dollars in the last quarter of 2015 which is less than a third of the 3.2 billion raised in the earlier quarter. But it is again just half of what they have raised during the Q4 of 2014 which is 1.9 billion.

WSJ

Does that mean the Funding has dried totally?

No, the amount of startups aroused in the last two years is huge and most of these startups got really well funded in 2014 and 2015.

But the real problem started here. Apart from the very well known Startups many of them are not able to get the next level of funding. Especially sectors like Food and Real Estate which got the real hit. The companies which are failed to get the next level of funding are predominantly from these segments.

There are huge competitions in these segments and so the factor that determines the uniqueness of these companies are missing.

Real Scenario

The real scenario is that the investors are becoming more concern on large funding and if they really see some traction on any such startups then their expectation of stakes are really high when compared to 2014 and 2015. This is clearly showing that the investors are aiming for quicker profitability.

On the other hand, the Startups are on the other path. Since they have understood the market very well, their main aim is to get funded as much as possible at the quickest  and exit as quick as possible too.

To be frank, you can very well see that there is not much long term aim or goal for most of these small startups.

Cleanup

This is nothing but a real froth which would not continue forever. There needs to be a cleansing  required and which has already started. There will be a vanishing stage of most of the “one another startup” following which the funding will once again come to the normal track.

Did the froth affect the genuine Investors? No, funding for the deserved startup is still going on as normal.

Need of investors

Investing is the prime of any investor. But the investing firm also needs to get sailed in this slowdown. End of the day, the balance sheet of these investment firms are going to impact their existence too. They want to show a good balance sheet than their rivals for their existence too.

Plan B – Course Correction

As I always say, the best practise of any firm or industry is to have a Plan B. That is the course correction. This is exactly what is happening in Indian Tech Start-Up Funding Industry.

Indian Tech startups got heavily funded in the last 2 to 2.5 years and many of them are not able to cross the Series A funding. This is the major reason for the funding industry to have a slow down and take the course correction.

So there is no need to worry as the funding industry is completely dried. It didn’t and it will not too. This is just a cleansing happening. Moreover, the so-called funding industry has nothing to do other than to fund again rather than keeping their money parked at one place. They are not meant to park money. They are there for the purpose of rotating the money and growing it as much as possible.

Conclusion

The amount of money got funded and the number of startups got funded in the last 2 or 3 years are phenomenally high and either they should get funded to the next level or shut down. This has already started and that is what is seen as slow down. The sooner this cleansing happens the earlier the funding will get to its original speed.

 

Healthy Attrition

two 3d humans look at human with megaphone

In the current situation in India, the most unwanted word is “attrition”. Being the appraisal time every management and HR would think more about attrition and burn their midnight oil.

Out of my experience, I would say, attrition is a healthy scenario than people sticking to their job without any innovative contribution. We need the core team who can transform our vision into the mission. But if we are not ready to bring in new blood either by replacing or expanding our core team we are not actually growing.

Attrition also gives room for the next level people to take the steering and start driving.

Some of the advantages of managed or Healthy attrition are:

  1. New Blood
  2. Best Ideas from their experience
  3. Monotonous
  4. Cost

Let us see one by one.

New Blood

Think where we were a couple of years back and what was the contribution by those people that time. They would have contributed many best practices and ideas into our vision which would have taken our company to this level.

Don’t we need the same type of new blood again now to take our company to the next level?

Best Ideas from their Experience

The new guys will surely bring in their best ideas and best practices out of their experience which will enable us to take our company to next level.

Monotonous

The main reason for anyone to become less productivity is their monotonous work routine. It could be the need of the company or project. But these guys also require a change in their work routine.

Since monotonous leads to productivity loss, it is always better to leave that scenario.

Cost

Though I bring cost as the last element here, it is also a very important factor to be considered. If a person becomes less productivity because of any known or unknown reason, is it not better to bring someone with relevant years of experience to that position with less cost?

Last one which is most important

If the people who leave us and shines at another place, is it not a pride to us too? If you are a leader you will surely feel so. If you are just a manager you will have grudges on them. The option leaves to your level of maturity.

Conclusion:

All attrition are not “bad”. There should be managed attrition which is good for the company and so they are called as Healthy Attrition. The growth of any company should be of process and people oriented and not just people oriented alone.

So there is no need to burn the midnight oil thinking of Annual Appraisal.