2015 for start-ups: Of exuberance, correction, and rationalisation

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The dream run for start-ups that began in mid-2014, continued till mid-2015, driven by excess liquidity and a FOMO (fear of missing out) effect. Hedge funds, some of whom made big bets on Chinese internet firms and won, and others who missed out on them, raced to acquire a slice of the Indian consumer internet pie. These drove valuations and saw start-ups raising $5.70 billion in 2015, with many raising fresh rounds of money in a span of six to eight weeks. Investors were already concerned as valuations were ahead of fundamentals, and they began to slow down from May-June. The sentiment thus, changed: Investors were no longer in a hurry to close deals or write big cheques. The same investors who were asking start-ups to chase growth were now asking for unit economics. As it became clear that fundraising will become tougher, start-ups began to rationalise (Housing, Foodpanda, Zomato, PepperTap) and conserve cash to stay longer in the game. Here's a snapshot of what 2015 meant for start-ups