Investors start looking away from loss-making startups

6 Sep 2022 , 08:14 AM

The Good Glamm Group has been on a roll; last year, it closed a number of acquisitions and raised back-to-back fundraising rounds as it pitched investors on its content-to-commerce approach. The Mumbai-based company, valued at $1.2 billion thanks to high-profile investors like Prosus (formerly Napsers) and Warburg Pincus, is now facing a reckoning as late-stage funding dries up and investors increasingly shy away from loss-making software companies.

Just a few months ago, TPG Growth, a private equity firm, abandoned Good Glamm’s fundraising effort. If the transaction had gone through, the funding would have given the company a value of more than $1.5 billion.

Other highly valued startups, including business-to-business ecommerce firm Udaan, Meesho, and new-age insurance company Acko, have also had trouble raising money as investor sentiments changed from ecstatic to extremely cautious, prioritizing profitability over pure growth once more amid persistent macroeconomic headwinds.

There has been a noticeable decline in investment rounds of $100 million and above this year, which dropped from 29 in the first quarter to 18 in the second. According to data from Venture Intelligence, the funding rounds totaled $3.6 billion in the June quarter, down from $6.7 billion in the quarter ending March.

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