Relive the top stories of 2023 from the startup world

Here are some of our must-read stories showcasing all that happened in the startup ecosystem in 2023.

Relive the top stories of 2023 from the startup world

Tuesday December 26, 2023,

7 min Read

Winter is well and truly here.

And the funding winter–the most-bandied-about phrase in the startup ecosystem–continues. In this challenging scenario, the best course for entrepreneurs is to focus on profitability and sustainable growth.

Here are the numbers that capture the sharp turn in the hyper-funding cycle of the previous year.

Indian startups saw funding decline by 72% in 2023, at $7 billion (until December 5)—compared to $25 billion in the previous year, making this the slowest year for dealmaking in the last five years. Signs of a slowdown were visible with just a couple of unicorns (Zepto, InCred) emerging in 2023, compared to 24 in the previous year.

According to media reports, new-economy companies laid off more than 28,000 employees in the first three quarters of 2023.

However, it’s not all gloom and doom, for there were some bright stars on the horizon. The top-performing sectors of 2023, according to a Tracxn report, were fintech, retail, and enterprise applications, although they witnessed a significant drop in funding compared to previous years.

2023 was a year of hits and misses, lessons and learnings, and a fair share of drama. YourStory covered it all—through the peaks, troughs, and everything in between.

Right from breaking the news of impact investor Omidyar Network India shutting operations to tracking the developments at cash-strapped Dunzo, the collapse of Silicon Valley Bank, and the G20 summit in Delhi, we kept our ear to the ground.

Take a look at some of our other must-read stories showcasing all that happened in the startup ecosystem in 2023.

Governance matters

Instances of financial mismanagement and failure to adhere to corporate governance standards were reported across several startups, including social media app Trell and car services platform GoMechanic. As financial irregularities shook the startup ecosystem, investors rushed in to set the house in order.

Corporate governance came to the fore with institutional investors ramping up due diligence to foster an environment of accountability and honesty. Looks like it’s time to go back to the drawing board and do business the good old-fashioned way!

Edtech: At a crucial juncture

After two glorious years, the edtech sector saw its fortunes fluctuating in 2022. The layoff saga continued in 2023 as well, amidst restructuring and cost-cutting measures to tackle the liquidity crisis.

BYJU'S–once the poster child of the edtech sector–is at crossroads, after a series of issues, including auditor Deloitte’s exit and loan default charges.

Where does it go from here?

Industry experts have urged the firm to bring the tech back in edtech, sharpen focus on core online offerings, and lose the dead weight it has gathered over the years.

Meanwhile, YouTuber Alakh Pandey’s test prep company Physics Wallah, the only profitable edtech unicorn in India, is putting its money on skilling to address the needs of job seekers.

Edtech firms are also experimenting with artificial intelligence (AI). From BYJU’S to upGrad, edtech firms are leveraging AI to personalise content, provide instant learning support, and offer targeted feedback to students.

D2C and ecommerce: Action-packed 

The D2C and ecommerce space saw high-octane action this year.

The IPO of Honasa Consumer, the parent company of Mamaearth , was subscribed 7.61 times on the final day of book building, after a slow start on day one.

Ahead of the IPO, YourStory’s Founder, Shradha Sharma, spoke to Mamaearth’s co-founders, Ghazal and Varun Alagh, who got candid about how they fielded the controversy around the bloated IPO valuation.

In August, quick commerce company Zepto became the first unicorn of 2023 in India after bagging a Series E funding of $200 million at a valuation of $1.4 billion.

Ecommerce major Flipkart believes in catching them early.

Gen Z shoppers in India– those aged below 26 years–are the newest target group for fashion brands, and Flipkart is hooking them to build a steady user base for its app-in-app offering SPOYL.

Emerging areas

Flipkart is also shaping the future of ecommerce with Flipkart Labs and has made key hires to lead this initiative. The division will explore emerging areas of technology such as 3D, augmented reality, virtual reality, and blockchain.

Speaking of technology, Web3 is ushering in an era of open data and user control. In the process, there have been some opportunities and exits as well.

EV: Gaining traction

Right before wrapping up the year, Ola Electric sprung the big news of it filing its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India. Here are the key takeaways from the company's much-awaited DRHP filing, as it gears up to become the first pure-play EV maker to go public in India. 

Though the sector is still riddled with challenges, EV and battery startups are making rapid strides; international players are also eyeing the Indian market with interest. In fact, Taiwanese player Gogoro believes India can become its global EV manufacturing hub.

With FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) regulations ending in March 2024 and Fame III coming into effect, the focus is likely to be on charging infrastructure.

VCs and banks may be wary of investments in EV, but fintech startups seem more willing to take chances. While banks are still figuring out how to underwrite electric vehicles, fintech startups have pulled ahead and captured the EV financing market.

Fintech: Innovation and caution

In the world of fintech, new-age digital platforms are wooing retail investors with solar biscuits, or digital solar assets, promoting them as an alternative investment choice.

With an entry ticket as low as Rs 500 and the promise of average annual returns of 9-15%, would you care for a bite of this biscoot?

On the other hand, you may want to be wary of social trading apps, which are rampantly abused to lure unwitting traders, often with promises of hefty gains.

While app operators say they moderate the content on their platforms, a probe pointed us to a murky tale of illicit stock tippers, lack of proper monitoring and regulation, and stock recommendations from those who are not licensed to do so.

Early this year, Ashneer Grover, the co-founder of BharatPe, who is under the Economic Offences Wing scanner, launched the Crickpe fantasy app with a lot of fanfare. However, legal experts and those who’ve been associated with the sport raised concerns about the platform which allows users to offer cash rewards to cricketers.

Grover continues to be in the news with the Delhi High Court refusing to restrain him from selling his shares in BharatPe.

Trend spotting and more

Moving on to the big trends and exclusive interviews this year …

●     The gig economy has been booming for some time now, and this year saw white-collar workers taking to it in a big way. High-skilled professionals, including those in the IT field, love gig work for its flexibility, work-life balance, and higher salaries.

●     After making in India for India, new-age gaming companies have now set their sights outside the country. Companies like WinZo, Lucid Labs, and Kratos Studios are spreading their wings and saying ‘ola’ to young gamers in Brazil, hoping to get them to spend more on their games.

●     There’s global potential from India, assured Bikram Singh Bedi, Managing Director. Google Cloud, which is developing solutions tailored to the Indian market, which can potentially have a global footprint.

 ●     In an exclusive interview with YourStory, Jack Selby, Managing Director of Thiel Capital, pointed out why India presents one of the greatest growth stories of all time. Make good use of local networks and raise adequate capital from the right people, he advised those wanting to build out of India.

We’ll end on a high note, but not without a little peek into the future.

YourStory also spoke to experts and entrepreneurs across sectors to understand the trends to watch out for in 2024. Check them out here.


Edited by Megha Reddy

Montage of TechSparks Mumbai Sponsors