Investor pressure pushing startups against the wall: Ronnie Screwvala

Pressure from investors is the root cause of startups being pushed to the wall as they are being forced to scale up operations too fast, says media entrepreneur and UTV Group founder Ronnie Screwvala. “Several startups have had to scale back operations lately. It is not an ecosystem issue, but plain silly investor pressure to have a multi-city strategy that is creating these problems,” Screwvala, who is now leading seed fund Unilazer Ventures, told PTI. The startup space has been attracting billions of hot money from scores of PE firms and other foreign investors like SoftBank of Japan and Chinese online retailer Alibaba, jacking up values within months. A whopping $14 billion got pumped into the country’s startups in 2015, though the tap has not yet turned dry, but this year it has started declining and hovers around $13 billion to date. In the last few weeks, several startups, including restaurant discovery platform Zomato, food ordering platform TinyOwl, and online real estate portal Housing.com, have attracted bad press for sacking hundreds of their employees and pulling back operations. While Zomato confirmed it is laying off 300 as of last month, Housing.com let go of more than 200 recently. TinyOwl has also fired employees, shrunk its operations, and is restructuring the business model. The agitated employees of TinyOwl had reportedly even took its chief executive hostage for a couple of days, demanding unpaid wages. “It is investors who stress on the growth plan and multi-city strategy knowing fully well that you have 29-year-olds out there who have never started an organization before. And now, you want them to run a pan-India structure. Even a Hindustan Lever took 50 years to do this,” Screwvala said. PTI