Friday, June 24, 2022
HomeBusinessEnterpreunashipStartup investors amid slowdown in funding forcing founders to focus on stronger...

Startup investors amid slowdown in funding forcing founders to focus on stronger unit economy

Mumbai: The volume of hiring and the frenetic pace that companies were looking forward to talent a few months ago are already showing signs of slowing down, as funding hits a roadblock in Indian startups and investors are forcing the founders to focus on the stronger unit economy.

Executive search firms and startup founders said that in the past 2-3 weeks, many startups have delayed hiring authorizations to the next quarter as they enter the funding winter and want to take the cautious step of slowing expansion and saving cash.

Search firms Longhouse Consulting and Ciel HR Services said the number of open positions has decreased and companies have reduced counteroffers used to attract and retain talent.

“Companies delay their decision to close an open position. Some are postponing that to the next quarter. “They save time,” said Anshuman Das, CEO of CareerNet and Longhouse Consulting.

“There is no longer an aggressive beating of salaries, a readiness to make big counter offers to pull a string on talent,” said Aditya Narayan Mishra, CEO of Ciel HR Services.

The road ahead will be more bumpy as more than half a dozen investors, board members, and company founders spoke to ET as the ax of cost reduction falls directly on employees as layoffs will increase and more rationalization will see in the next two quarters. Increase in the number of mergers and acquisitions and consolidation will lead to leaner teams.

Discover stories that interest you

“In 2022, many startups are realizing they have too many people. “This can now lead to a very high standard of quality control,” said Pranav Pai, managing partner at venture capital firm 3one4 Capital.

Salaries for new hires will be more controlled, open positions will decrease, and companies will be willing to delay hiring. For current employees, the assessment will be much more stringent, and the scrutiny of quality control and employee expenditure will be higher.

Board members agree that if candidates are tough, the company should move on. “If candidates keep their shopping offers, they may lose more… What happened last year in terms of playing with counter-offers and the unprofessional behavior of some candidates was unsustainable… companies will not tolerate such unnecessary behavior,” Pai added.

Alok Goyal, partner at Stellaris Venture Partners, agrees: “Most board rooms are discussing burnout plans that will affect the pace of recruiting and in some cases even the empowerment of existing teams.”

The change in the overall startup environment comes after two years of steep rise in valuation and fundraising, which also intensified the talent war. But more than 3,000 people have been laid off since the start of 2022. This week,
Cars24 laid off more than 600 employees, duration
ed-tech unicorn Vedantu undermined 424 people. Unacademy, Lido, Trell, Meesho and Furlenco also shrunk earlier in the year.

“Investors are guiding portfolio companies with caution and asking them to be prudent when investing,” said Krishna Kumar, founder of edtech company Simplilearn. “The real effect will be seen in a quarter or two of the line,” he added.

Compensation is already sobering as founders tighten their wallets as liquidity dries up, concerns about geopolitical tensions escalate, and stock market corrections affect deals.

“Many large startups are rethinking projects outside of their core and are wary of team expansion. Sajith Pai, director of Blume Ventures, said:

“Compensations are starting to dwindle as companies wait for the right candidate,” said Arpi Mehta, co-founder of dental technology startup Toothsi. “The crazy expectations we saw 12-18 months ago are now tempering, especially in technology and product functions,” he added.

Do NOT follow this link or you will be banned from the site!