Since the beginning of the startups, year 2015 marked the flow of VC investors into startup ecosystem, where spotlight was focused more on sales and increasing scales, which resulted in the rush of investments in consumer business. Profitability and valuation were considered secondary and ability to scale up rapidly was the primary approach. Many investors provided not only the Series A capital but also the Seed Capital in expectation of a huge return.
But 2016 witnessed various ups and downs in the startup ecosystem which insisted investors to recalibrate their approach. Now investors are being more cautious and not handing money over easily. They are focusing on the firms which can demonstrate solid business model which is likely to raise funds for the growth of the firm.
Behavioural change of the investors has created an urge in the blooming startups to back their business model with growth stimulator which will assure profit for the investors. More focus on the profitability and valuation has shifted the spotlight onto the Sustainability, which has pushed the startups to be more selective in every approach.
Indian government has also witnessed the trends in the startup ecosystem and initiated the Startup India campaign to boost entrepreneurship. The government along with SEBI is working to improve the bandwidth of startups to allure the foreign investors which will result in the increase of the Indian GDP. Although, the margin will be small, but it definitely is beneficial in the long run.
Therefore, we can say that for the long term, the investors are going to continue with the calibrated approach, while the future of the short term and mid term is still controversial i.e. the investors may continue with their old approach of investing for scaling and selling or the new methods will be applicable for them as well.
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