Summer might be making its way across India with daytime temperatures soaring everywhere, but the country’s startup ecosystem continues to be firmly embroiled in the funding winter.
Two of India’s most valuable startups have seen their valuations slashed in the last two days. Yesterday, Swiggy’s investor Invesco had slashed Swiggy’s valuation by 33%, valuing the company at just $5.5 billion from $8.2 billion previously. Today, Ola’s investor Vanguard slashed Ola’s valuation by 35%, valuing it at just $4.8 billion compared to $7.4 billion earlier.
And these are only the latest falls in the valuations of the two companies. In late 2019, Ola was valued at $10 billion, but saw its valuation slashed first by 45 percent in the first half of 2020, and then by another 9.5 percent in 2021. Ola is now valued 52 percent below its peak valuation. Similarly, Swiggy too was valued at $10.7 billion in January 2022, but had seen its valuation slashed to $8.2 billion in April, and now been cut further to just $5.5 billion. Swiggy’s valuation thus has fallen by 49 percent from its peak.
Both Ola and Swiggy have faced headwinds in recent times. Ola has found it hard to grow its ride-hailing business over the last few years with its revenue numbers remaining largely flat. Swiggy has seen the valuation of its publicly-traded rival Zomato fall to around $5 billion, which put a downward pressure on its own valuation. More recently, the emergence of ONDC, which is matching companies like Swiggy and Zomato on discounts, has created a further cloud on Swiggy’s future prospects.
These valuation cuts aren’t a bolt from the blue — there had been signs that both Swiggy and Ola had been struggling in recent times. Swiggy had fired 380 people earlier this year to cut costs, sold its cloud kitchen business, and shut down its meat delivery vertical. Ola, for its part, had fired hundreds of employees, and shut down both its used cars business and its grocery delivery business. Both companies, which were amongst India’s highest valued startups, have now had their valuations slashed by their investors, and are worth half of what they once were. Markdowns aren’t uncommon in startups — companies like Flipkart and Zomato have previously seen their valuations be slashed by investors before recovering — but Swiggy and Ola will have to execute out of their skins to turn into viable businesses at any point the foreseeable future.