Chanda Kochhar thinks that startup valuations will settle once eco sense takes over

Addressing concerns being raised over sustainability of high valuations commanded by startups, ICICI Bank Chief Chanda Kochhar today said the "euphoria" will settle down once economic sense takes over.

"I believe finally the values have to come out of or based on the underlying economic flows within these business models. That is where finally the valuations should adjust," Kochhar said at an event on corporate governance organised by industry lobby group CII.
"I am sure currently it is more of the beginning... it is more euphoria, but gradually the valuations would move towards the underlying economic flows in every business," the managing director and chief executive of the country's largest private sector lender said.

Kochhar said the only comforting factor is that investors pouring in money into such startups are "mature" and people who take informed decisions after a detailed analysis.

Indian startups, especially those in the e-commerce space have seen a huge spurt in their valuations, which only rises with every round of funding. Critics fear the companies are burning up the cash on things like discounting and worry about their sustainability.

Flipkart is reported to have raised money from investors at a valuation of over $15 billion recently, while its rival Snapdeal has also seen a similar surge in valuations while raising money from dedicated venture capital funds.

Image credit: Indiatimes