Indian startups are resorting to layoffs, hiring freezes, shutting down non-core verticals, and rationalizing ad spends as a two-year funding spree slows down
Moneycontrol : Tweets: @avlesh , @subramanya_sv , @derzuschauer7 , @adadithya , @nicks103 , @k_p_ganesh , @_prashantnair , @chandrarsrikant , @rmantri , @chandrarsrikant , @aaravmeanspeace , @binoy_prabhakar , @nimsaw , @latha_venkatesh , @abhilivian , and @anandlunia Tweets: Avlesh Singh / @avlesh : For a rare few companies, this is absolutely the party time they wait for 🎉 - rational talent market - going from being untouchable to lovable in the VC world - noise free environment for customers/partners/team Aa jao - apun ka party abhi shuru hoyela hai beedu 🥂 https://twitter.com/... Subramanya S V / @subramanya_sv : Well, nothing in life is as good or as bad as it seems. To say that the great startup story is over is a bit too much. Surely there's a significant correction in the market which is the good interest of all startups. https://twitter.com/... @derzuschauer7 : Only when the tide goes out do you discover who's been swimming naked. https://twitter.com/... Adithya Venkatesan / @adadithya : 💯💯💯 Startups that haven't hired recklessly are viewing this as an opportunity to pick up solid talent. During every past downturn, some of the most resilient companies have taken shape, & as bad as things look, resilient orgs are taking shape in the gloom & doom. https://twitter.com/... @nicks103 : this is music to the ears of TCS/Infy who will go back to their 6-8% yearly hike model https://twitter.com/... K P Ganesh / @k_p_ganesh : Couple of weeks ago we were celebrating nearly 100 unicorns https://twitter.com/... Prashant Nair / @_prashantnair : Good story narrating how things are changing for the go-go start-up world ! For funders, businesses & employees ! https://twitter.com/... Chandra R. Srikanth / @chandrarsrikant : “India's startups had got used to a 24x7 party and now they are facing withdrawal symptoms. So I would call it withdrawal symptoms and not a slowdown” @anandlunia https://twitter.com/... Rajeev Mantri / @rmantri : The hangover matches the binge. Trees don't grow to the skies, rain falls down. It's the way of the world. Makers keep making, builders keep building. https://twitter.com/... https://twitter.com/... Chandra R. Srikanth / @chandrarsrikant : 🚨🚨🧵 Layoffs, shutdowns, funding crunch: The Great Indian Startup Party is over. Founders and investors say they expect a prolonged period of pain for any growth-stage startup that gets caught with a short runway at this time @patwardhannn and I report https://www.moneycontrol.com/ ... Priyanka Pani / @aaravmeanspeace : How media loves to make statements. Layoffs isn't new in the startup ecosystem. 2015, 2017, 2020 witnessed layoffs. There are these phases of corrections. party is certainly not over ! We are a young and growing nation. Abhi toh party shuru hui hai 👍🏼🔥 https://twitter.com/... Binoy Prabhakar / @binoy_prabhakar : Layoffs apart, startups have shuttered non-core units, rationalised ad spends & frozen hiring after a blockbuster funding spree of 2 years. The Great Indian Startup Party is over. Super reporting by @patwardhannn & @chandrarsrikant https://www.moneycontrol.com/ ... Nimish / @nimsaw : Interesting longread on the correction happening in the Indian startup ecosystem and why funding will be hard to come by unless it's an early stage startup. Via @moneycontrolcom @chandrarsrikant @patwardhannn https://www.moneycontrol.com/ ... Latha Venkatesh / @latha_venkatesh : Must read wrap of the pain in the start-up space... from Chandra Layoffs, shutdowns, funding crunch: The Great Indian Startup Party is over https://www.moneycontrol.com/ ... Abhishek Chatterjee / @abhilivian : The market corrects itself. We will see more fundamentally robust companies, resilient founders. The companies that survives and thrives now will set up the bar for tomorrow. Believe in your skill and build for long term. https://twitter.com/... IQ wala Anand Lunia / @anandlunia : If you are selecting a company to build a career in, you don't want to join a company that raises big amounts every six months. https://www.moneycontrol.com/ ...
Context & Ripple Effects
This Moneycontrol report lands at the inflection point of India's startup cycle: after two years in which cheap venture capital funded aggressive hiring and marketing, founders are now cutting headcount, freezing recruitment, killing non-core verticals, and trimming ad budgets. The squeeze was already visible in the numbers — Indian startups raised $24.7B from January to November 2022, down 35% year over year per Tracxn, before collapsing to just $2B in Q1 2023 across 271 startups, the smallest quarterly total in nearly three years.
The cost-cutting is not abstract: it shows up in named casualties like ShareChat, where employees and investors describe revenue failing to keep pace with burn against its roughly $5B 2022 valuation. The piece also captures the counter-current — operators like WebEngage's Avlesh Singh arguing that for disciplined companies, a rational talent market and quieter competition make this their moment.
First-order effects
- Startup employees bear the immediate hit through layoffs and hiring freezes, while the ad-spend rationalization directly cuts revenue for the media platforms and performance-marketing channels that grew fat on VC-funded customer acquisition.
- Founders must shut or spin down non-core verticals, concentrating remaining capital on the single business line that can plausibly reach sustainability before the next fundraise.
Second-order effects
- Investors reprice burn-heavy names hardest: ShareChat's trajectory — where revenue lagged its ~$5B valuation — becomes the template for down rounds and bridge terms across the portfolio, forcing every founder to defend unit economics rather than growth curves.
- A looser talent market flips bargaining power to profitable or well-capitalized firms, letting them hire experienced operators who were untouchable during the spree, while cheaper ad inventory lowers acquisition costs for those still spending.
Third-order effects
- If the pattern holds, India's startup ecosystem structurally shifts from growth-at-all-costs toward the profitability-first posture already visible in the broader downturn, where capital rewards products that make money over spectacle bets like self-driving cars and metaverses.
- The weakest-funded cohort consolidates or exits, echoing how earlier capital waves reshaped the field — much as the influx of Chinese-capital-backed challengers once forced incumbents to compete on subsidized growth they can no longer afford.
The trend: India's startup economy is pivoting from a two-year, VC-fueled growth spree into a cash-conservation cycle in which survival depends on burn discipline rather than fundraising momentum.