We were confined to our homes in 2021, but we remained connected thanks to technology. Although it was not the best year for many of us, it was a fantastic year for the Indian startup ecosystem. It catapulted over 40 Indian startups to the status of unicorns.
However, 2022 has flipped the switch for all of these startups that had a successful year the previous year. This year has seen widespread global unrest as a result of the Russia-Ukraine conflict, which has resulted in disrupted supply chains, commodity shortages, and inflation. The year 2022 has not been kind to aspiring entrepreneurs.
During the last few turbulent months, 12,000 jobs have been lost from mostly VC-funded Indian startups, while the global tally stands at 22,000. Everyone, from Tesla to BYJU, has felt the tremors of these times. You're probably wondering why this is happening to startups, or even how it's happening. There's a word for it. The 'Funding Winter' is what it's called.
WHAT EXACTLY IS WINTER FUNDING?
To cut to the chase, Indian startups have received a massive influx of venture capital funding in recent years. Analysts have even called the valuations "unrealistic." As a result of the excess capital, startups were able to prioritize rapid growth over profitability. To achieve these lofty goals, they hired in large numbers and lavished them with benefits. All of these circumstances inevitably resulted in a bitter concoction of cash burn (and even a low-key talent war).
This is where the Funding Winter enters the picture. Given the current market conditions, capital has been dwindling from the top. Limited partners (LPs) have reduced funds for venture capitalists, which has reduced funds for startups. Doesn't that sound like a domino effect?
Furthermore, in recent months, venture capital investors have prioritized profitability and efficiency over breakneck growth, which has been a go-to model for many startups. This has tipped the balance even more. Startups are suddenly short on funds while incurring high operating costs.
WHAT EFFECT WILL IT HAVE ON ME?
The Funding Winter is one of the leading causes of widespread layoffs in startups, particularly among tech employees. Why? Because, during the startup boom, these companies went on a hiring spree to beef up their tech and product teams. This was done in order to gain a competitive advantage by acquiring more market solutions and products. According to industry experts, tech engineers were even offered up to a threefold increase in pay at the time.
As a result, layoffs began almost immediately when funding was cut. Unfortunately, layoffs are here to stay. According to experts, the funding winter could last up to 18 months, and startups will continue to cut costs during this time. Despite the fact that edtech startups are leading the layoffs, other sectors may not be as safe as some would like to believe. Because of the current market conditions, startups are refocusing on metrics and value creation. Employees may be expected to demonstrate their worth in order to avoid being caught up in the downsizing process.
HOW DO I CHANGE?
Many tech workers are expected to return to traditional business models. This may be a good move, but with the job market shrinking and the number of job seekers increasing, it is bound to create fierce competition.
To help job seekers stand out, our in-house Jobcurators experts have created a special section for employees who have been affected by the funding winter or will be short on funds in the future. We also work with startups as their go-to outplacement partner to help their laid-off employees find new jobs.
So, how does it work, you might wonder? We will list you as a 'Immediate Joiner' in front of 50,000+ active recruiters as soon as you sign up (or your startup signs you up). You'll be first on their list. The story does not end there. We'll also assign WorkBuds to guide you through the process and ensure that your job search goes smoothly.
It appears that you would benefit from the VIP treatment at Jobcurators.