Valuation Markdowns: Challenges & Opportunities for Startups

Does Valuation Markdown mean end of the road for startups or is it the rebirth for them? This article explores the impact of valuation markdowns on Indian startups, focusing on the challenges they face and the opportunities they present. Read to explore.

Swati Dayal
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The Indian startup ecosystem has witnessed a recent surge in the practice of valuation markdowns, which has affected even the highly valued startup unicorns. However, it is important to note that contrary to popular belief, valuation markdowns do not always have a detrimental effect. 

What are the implications of valuation markdowns on the Indian startup ecosystem?

They also present another side that should be considered. In this discussion, we will delve into the two-fold nature of valuation markdowns for startups in India, shedding light on both the challenges they pose and the opportunities they offer. 

Furthermore, we will examine the perspectives of industry experts regarding the implications and consequences of these valuation markdowns.

How do valuation markdowns affect prominent Indian unicorns and their investors?

Investors are continuing to devalue their holdings in unicorn startups, including Byju's, Meesho, and Eruditus, as valuation markdowns persist throughout 2023.

A number of prominent unicorns such as BYJU's, Meesho, Eruditus, Swiggy, Pharmeasy, Pine Labs, Ola, and OYO are currently experiencing valuation markdowns. Notable investors, including Softbank from Japan, Blackrock, Janus Henderson, Invesco from the US, Baron Capital from the US, Neuberger Berman and more have all reduced the value of their holdings in these unicorns.

Startup UnicornPeak valuationCurrent valuationFall in valuation
Byju’s$22 billion$5.79 billion

73 percent


$10 billion$5.5 billion$5.5 billion


$10 billion$4.8 billion$4.8 billion

Oyo Rooms

$10 billion $2.7 billion78 percent

Pine Labs

$5billion$3.1 billion38 percent


$5.6 billion$4.4 billion21 percent

Courtesy: This Is The Fall In The Valuation Of Indian Startups This Year (

Previously, well-known Indian unicorns like Flipkart, Ola, Paytm, Zomato, and Snapdeal had also encountered valuation markdowns. Prominent investors from across the world had marked down their investments in these unicorns. Factors contributing to these markdowns include heightened competition, regulatory challenges, concerns about profitability, and shifting market dynamics. As a result, mutual funds and major investors have lowered the valuations of these companies.

What are the challenges faced by startups due to valuation markdowns?

Valuation markdowns, while not directly affecting companies, can have adverse consequences on the startups especially like in their future funding rounds and initial public offerings (IPOs). These markdowns stem from different scenarios like funding crisis, market fluctuations, competition, market needs & demands, layoffs, accounts or internal struggles. Several key challenges arise from this situation, including obstacles in fundraising, negative impacts on reputation, and difficulties in retaining employees.

Startups face difficulties in securing funds from investors due to these valuation markdowns. Lower valuations make it more challenging to attract new investors or secure subsequent funding rounds. This also raises doubts over sustainability of the startup as well as its long-term existence and performance.

Additionally, valuation markdowns have a direct impact on trust of investors, credibility, reputation, media image and retention of employees. 

Expert’s View - Valuation Markdowns: A Wake-Up Call for Businesses

Talking to TICE News, Mr Vikram Ramasubramanian, Partner, Inflection Point Ventures, said, “Many businesses went out and claimed to have an endless source of capital, offering deep discounts to attract customers and demonstrate revenue growth. However, it is important to understand that businesses cannot solely rely on discounts or freebies. The foundation of a successful business lies in strong fundamentals and meeting the fundamental needs of customers, addressing market needs, and timing the market appropriately while effectively addressing competition and solving real problems. These are the factors that build a solid business.”

“In many cases, businesses have realized the importance of these fundamental principles. Perhaps they were overinflated and relied heavily on abundant capital. However, when that capital vanished, they had to go back to basics. They needed to cut back on unnecessary expenses and restore a sense of reasonability and balance. This process will take time, and as a consequence, funding markdowns and other related aspects are being observed in today's business landscape. The key takeaway is the importance of going back to basics, focusing on the core principles that drive a successful business,” Mr Subramanian adds.

The Venture Capitalist further opines that, “For many generations people would say I won’t take a loan or don’t want to leverage my business. I want to run a profitable business. I think those sensibilities are returning back and people are working towards that. Therefore, you would see stronger businesses emerging out of this.”

The dual perspective of valuation markdowns: challenges and opportunities for startups

Valuation markdowns, despite the short-term challenges they bring, play a crucial role in prompting positive changes within startups. They give a reality check to the startups to rethink their business models and re-strategize for survival for long term and consistent growth. These markdowns open up opportunities for strategic focus, cost optimization, and investor reassessment. Startups then are left with no option but to re-evaluate their plans. One of the priority areas for the startups become cost optimization and curtailing of unnecessary expenses. As a result, efficiency improves, and financial discipline is strengthened. Interestingly, unlike the customers and media, the investors understand the potential of disciplining the operations within the startups adding value to their businesses. These investors know that reduction in valuation does not mean reduction in business potential of the startup. Hence, they become open to invest in the promising startups at a more favourable valuation.

Success stories of startups after experiencing valuation markdowns

One notable example of how valuation markdowns have led to the growth of larger business models and increased success is Grofers. Following a valuation markdown in 2016 by its investors, Grofers underwent a transformation and re-emerged as Blinkit. Similarly, other startups such as Flipkart and Oyo have also achieved success despite experiencing valuation markdowns.

It is of utmost importance for the Indian ecosystem to recognize that markdowns should not be seen as the end, but rather as an opportunity for startups to fortify and strengthen their resilience. Valuation markdowns in the startup sector present both challenges and opportunities. While they may initially pose obstacles like difficulties in fundraising and concerns about reputation, they also act as catalysts for strategic focus, cost optimization, and reevaluation by investors. By acknowledging and addressing both the challenges and opportunities that arise from valuation markdowns, startups can effectively rebuild their business models and overcome the crisis they face.