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A few weeks ago, Tata group company Titan hogged the headlines when it bought 27% stake in CaratLane (Titan has been a strategic investor since 2016). A cash exit for an Indian consumer internet entrepreneur is rare, more so when it comes as the broader industry is struggling to get the fundamentals right, and funding from risk investors has fallen precipitously.
Loss-making startups taking on debt is a sure-shot recipe for disaster, said a founder who has seen several funding cycles. “In the era of easy money and low interest rates, investors and lenders drastically lowered the bar on asset quality as they were desperate to fill the hole in their P&L ( profit & loss). But lenders who burned their fingers will never come back to the product,” he said.
Over the past decade many venture-backed ecommerce startups have raised capital only to subsequently shut down, from Letsbuy and Urbantouch to Craftsvilla and Voonik. Others, such as Snapdeal and Shopclues, are also in the past, now. Amidst all this, let’s not forget the grand entry of the juggernaut that is Mukesh Ambani’s Reliance Industries. And the Tata group which has been making a push into the sector with Neu.
Welcome to the second edition of Full Stack, a place where you’ll find unfiltered commentary on all things technology.
What started eight months ago, with investors asking for profitability, tighter control on costs and unit economics, to layoffs and downsizing, has now turned into a full static mode for the past few months. To add to this, a bunch of companies have seen major corporate governance lapses, highlighting how the excesses of previous years are throwing up concerns about basic business fundamentals.
