A lot of pontification is flying around for TinyOwl, the food ordering startup that's landed in big trouble - much like the other young IIT Bombay alumni founded startup Housing.com. (Prior to the latest "layoffs triggered hostage crisis" at the company, one had noticed TinyOwl - apart from its remarkable back-to-back funding announcements - mainly for a tweet on how, between cash backs from it and Paytm, one could get paid to eat!)
Arvind K. Singhal, Chairman and MD of retail consulting firm Technopak, has used the goings on at TinyOwl, to ring the death-knell for startups across categories. "These incidents highlight some bitter realities about the Indian startup ecosystem, which have so far been overshadowed by the multi-billion dollar valuations of a handful of companies, and the multi-million dollar funding rounds they have done. I believe that such ugly incidents are in store for several other companies in India’s fledgling startup ecosystem. In fact, these problems may well emerge in the much-celebrated e-commerce space in the future, I expect at least one major online marketplace player to shut down or severely rationalise its operations within the next 24 months. That could lead to tens of thousands of employees getting directly impacted." he writes in the Quartz.
VC investor Pankaj Jain of 500 Startups has countered Singhal in a MediaNama post saying:
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Arvind K. Singhal, Chairman and MD of retail consulting firm Technopak, has used the goings on at TinyOwl, to ring the death-knell for startups across categories. "These incidents highlight some bitter realities about the Indian startup ecosystem, which have so far been overshadowed by the multi-billion dollar valuations of a handful of companies, and the multi-million dollar funding rounds they have done. I believe that such ugly incidents are in store for several other companies in India’s fledgling startup ecosystem. In fact, these problems may well emerge in the much-celebrated e-commerce space in the future, I expect at least one major online marketplace player to shut down or severely rationalise its operations within the next 24 months. That could lead to tens of thousands of employees getting directly impacted." he writes in the Quartz.
VC investor Pankaj Jain of 500 Startups has countered Singhal in a MediaNama post saying:
"...the Indian startup scene is far broader and diverse than this one small sector. The food and grocery delivery vertical has been overfunded. Some of the companies closing rounds forced me to scratch my head and ask, “what am I not getting?” That’s Ok. You know why? There are amazing entrepreneurs and developers, and designers and financial wizards building solid businesses. And guess what, it’s not going to stop. What else isn’t going to stop? The funding of great companies but also of companies that aren’t run very well.
...At 500 Startups, we’re not going to slow down our investing in India. In fact, I love all this talk of doom and gloom. Why? It’s going to send wannabe founders, angels (who figured they can make more money investing in startups than real-estate) and the glory seekers running for the hills. This means less noise, serious founders pushing the limits of creative destruction because they will have to do more with less, and investors, in it for the long haul, getting access to great founders building real companies."The TinyOwl episode has also served to inspire NextBigWhat to follow up its Diwali call for "startups and investors to clean up their mess" with an idea for an on-demand service that will fly in bouncers to defend startup founders!
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.