Fickle markets

I wrote about international VC funds piling into Indian tech startups in a post from May of this year. Sequoia Capital, Accel, SoftBank, and Tiger Global each raised funds between $305M and billions of dollars to invest in Indian startups.

Fast forward 6 months and at least one of these funds, Tiger Global, appears to be scaling back its appetite for Indian startups. I wouldn’t be surprised if other large funds follow suit. The excerpt below is from an article in The Economic Times of India.

“”I am going to be consolidating a considerable part of my Indian portfolio this year. I think I entered India two years early,” [Tiger Global partner] Fixel reportedly said to the founder of an ecommerce company that his firm has backed.”

So what has changed in 6 months? From the quote, it seems unlikely that there has been an important shift in the underlying fundamentals of individual companies. Rather, it seems like what has changed is the market’s attitude towards startups. US investors are increasingly focusing on building internet companies with healthy unit economics combined with growth, rather than those that grow at all costs. And the changing attitude of US investors is being felt in other countries.

Markets are very fickle. What’s in favor one year can be out of favor a few years, or in this case even months later. It may then be back in favor a few years after that. As a startup founder, you can’t control the market. You can simply take when it’s giving, and be ready to buckle down when it’s not.