With no money for funding available, is the startup frenzy fading away now?

When the startup culture entered India, there was a lot of hullabaloo about it. Many employees for big organisations went on to form their own ventures, raking profits, getting investments, et al.

Now, almost 18 months after, there is a lull after the pandemonium of funding rounds.

Capitals are becoming difficult to raise and startups have started laying off employees.

Reportedly, the total VC money invested and the number of deals has hit a low in October. There were 24 transactions worth $112 million (Rs 730 crore) closed in October. Whereas, VCC Edge stated that in March this year, 43 deals worth $831 million were closed.

"Companies need to find moats beyond just giving discounts. This slowdown will lead to a cleansing of the system," a prominent VC investor told ET.

Niren Shah, MD at Norwest Venture Partners, told ET that India's startup ecosystem was entering the second phase of the current funding boom. "While the first phase was about investing in spaces that are big and how you could become the number one player in them, phase two will be about which entrepreneurs can manage businesses with a lower burn and take competitors out," he said.

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