Top reasons that troubled startups in 2023
The year 2023, predicted to be a year of exuberant startup growth, instead turned into a turbulent journey through an ocean of choppy economic waters. The familiar bouts of optimism gave way to the icy winds of a “financing winter” in which uncertainty and inflation battered the fledgling sails of startups around the world. While some start-ups, such as B. agile yachts, adapted to the storm and mastered it, others, such as B. rigid freighters, were plagued and hunted by a variety of challenges. Understanding the core reasons for these struggles is critical not only to surviving in the present but also to charting a resilient course for the future.
At the forefront of this turbulence is a strong cocktail of economic uncertainty and changing conditions. Inflation, a global behemoth, devoured budgets and forced startups like Swedish oat milk favourite, Oatly, to rethink their pricing strategies and prioritize core offerings. Supply chain disruptions, tangled like a fishing net, choked off the flow of goods and materials, affecting production and delivery across sectors from Indian e-commerce giant Flipkart to German electric vehicle startup Sono Motors.
Geopolitical tensions further increased instability, disrupting global markets and affecting cross-border operations, as evidenced by the impact of the Ukraine war on startups in Europe and Asia. In this dynamic and unpredictable environment, agility and adaptability became the new lifelines for company survival. The financing landscape, once a source, became a trickling stream. Venture capitalists, once eager to shower startups with cash, tightened their finances and demanded clear paths to profitability and financial resilience. This “funding winter” forced startups to re-evaluate their business models, prioritize their core offerings and explore alternative sources of capital such as bootstrapping or angel investors.
A prime example is Indian online furniture startup Pepperfry, which is relying on cost-cutting measures and exploring strategic partnerships to survive the funding downturn. The result? A global shift from blind optimism to data-driven decision-making and a strong focus on sustainable growth, exemplified by US fintech giant Stripe's focus on profitability and expansion into new markets.
Kansaltancy Ventures is a Global Investment Management & IB firm into Venture Capital, Debt, M&A, Consulting & Virtual CFO with a network of 450+ VC Funds, Family Offices, Banks & Financial Institutions. Check https://www.Kansaltancy.com
The impact of these challenges spanned multiple sectors. Retail startups, like brick-and-mortar stores around the world, have faced rising costs and changing consumer behaviour, forcing them to adopt innovative omnichannel strategies and hyperlocal offerings. Tech startups like Zomato and India's Swiggy have faced a lack of venture capital, prompting them to focus on profitable solutions and address critical needs in healthcare, education, and environmental sustainability.
The ongoing impact of the pandemic has further changed the landscape, accelerating the growth of remote work solutions, e-commerce platforms and digital health services such as Indonesian telemedicine startup GoodDoctor. Such innovative solutions are often necessary, and startups actively seek them through guidance from expert companies like Kansaltancy Ventures.
However, amidst the turmoil, resilience shined through clearly. Startups, like experienced captains navigating rough seas, have implemented various strategies to stay afloat. Flexibility was paramount, and agile teams like those at Brazilian on-demand laundry startup Wash Me quickly adapted to changing market trends and customer needs.
Cost-cutting measures have been implemented, from optimizing operations to renegotiating contracts, as seen with German food delivery giant Delivery Hero. Collaborative partnerships, both within sectors and across borders, have become a powerful tool for sharing resources and mitigating risks, such as the joint venture between Indian ride-hailing giant Ola and South Korean battery maker SK On shows how to build electric vehicles.
Kansaltancy Ventures is a Global Investment Management & IB firm into Venture Capital, Debt, M&A, Consulting & Virtual CFO with a network of 450+ VC Funds, Family Offices, Banks & Financial Institutions. Check https://www.Kansaltancy.com
But for those who weathered the storm with agility, resilience, and innovative spirit, it also offered invaluable lessons and opportunities for growth. The lessons learned during this challenging year will shape the future of startups and foster a more adaptable, sustainable, and impactful ecosystem. So as the winds of change continue to blow, startups that prioritize flexibility, prioritize financial resilience, and stay true to their spirit of innovation will not only survive but also thrive, forging their own path in the ever-evolving landscape of entrepreneurship worldwide and in the dynamic Indian market.
(The article is authored by Kansaltancy Ventures which is a global investment management firm specializing in making companies funding ready and raising funds for them and accelerate their dreams by means of Venture Capital, Angel Investment and Strategic Services).
About Tushar Kansal, Kansaltancy Ventures:
Tushar Kansal is the Founder and CEO of Kansaltancy Ventures, a distinguished professional recognized as a "Thought Leader" and "Thought Influencer." With a proven track record, Tushar has provided support to startups and growth-stage companies across various sectors. As a Venture Advisor with a Canadian VC Fund, he has contributed to over 350 investments spanning more than 60 countries.
Tushar's expertise is highly regarded in the business community, and his opinions are frequently sought by leading business news channels and publications, including CNN-News18, VCTV (Venture Capital Tv), Business World, Inc42, TechThirsty, and Digital Market Asia. He has delivered over 300 talks, available for viewing on YouTube and Google, showcasing his vast knowledge and insights.
Connected with 450+ investors globally, Tushar Kansal engages in sector-agnostic deal-making, with a typical ticket size ranging from USD 1-50 million.
Contact Information:
- Email: tk@kansaltancy.com
- LinkedIn: Tushar Kansal on LinkedIn
- Personal Website: Tushar Kansal's Website
- Blog: Indus Churning Blog
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