Our Co-founder & Managing Partner Rajul Garg wrote about how his major learnings from 2023.
Venture investments generally see a significant upswing every few years. Driven by deeper Internet penetration in India, 2014 was one such year. 2021 brought together a multitude of events – increased technology use because of Covid, maturing of the digital payment infrastructure, and most importantly near zero dollar interest rates, leading to a gluttony of available capital for startups in India. 2021 saw investments like never before. 2022 started seeing a cool off and 2023 continued that trend to result in a significantly slower year for venture investments in India. I expect 2024 to continue the down trend, and hopefully reverse it at some point in late 2024.
This vastly different environment resulted in a number of important learnings for startups and VCs alike in 2023.
A lot more can be done with a lot less: We saw a number of companies across the ecosystem had bloated spends in 2021. They believed speed is the key and hired very large technology teams. When I was at GlobalLogic in mid-2000’s I used to lead a team of close to 600 engineers. These engineers got a significant amount of work done, supported tens of cutting edge clients and churned out a lot of software. In 2021, I saw relatively small companies hiring 100’s of engineers for what I thought was not that complex a product. In 2023, we saw workforces reduce very significantly, sometimes as much as 90 per cent. I have personally seen 30 people teams cut down to 3, 500 to 50. And companies realise the loss in productivity is modest, i.e. a much reduced team is able to produce near similar productivity. I hope this lesson stays with the eco-system since capital efficiency is so important.
– Capital does not solve business model problems: We saw a number of companies in 2021 with weak business models raise a lot of money. In 2023, a number of these companies shut shop and there are several which are left with millions of dollars in funding, but no business and an investor group unwilling to spend that money. I continue to believe that sustainable business creation is key to entrepreneurial success and any amount of capital can not solve for viable business models.
You can read the full article here: https://vcworld.in/2024/01/02/major-learnings-from-2023/
