Has The Start-up Story Ended?

The much-touted start-up scene is cracking up. Is the boom over then? No, say experts. It’s necessary course-correction.

- Ajay Sukumaran

A few months ago, a head-hunter in Bangalore captured the buzz that start-ups had created in the job market by drawing a parallel to the BPO—or out-sourcing—boom of the early to mid 2000’s. “By May of the year, we used to make our bonuses,” he reminisced. “Last year was also a year like that. This year, I’m not sure.”

It wasn’t that start-ups were hiring in sheer numbers as other major sectors a year ago. Rather, it was the flutter they caused, offering hefty salary hikes, employee stock options and generally the pace at which things happened. A lot of that, it appears, has now changed.

To be sure, start-up activity is still intense, and venture capitalists are writing cheques and people are indeed getting hired. But, by many accounts, there’s a good dose of prudence in this. “The free money is over,” is how one observer described the scenario.

The funding crunch that set in, in early 2016, showed up much of the distress that lay underneath the ‘exuberance’ in the start-up world, especially e-commerce and food start-ups. Reports of lay-offs are heard. This year, the Indian Institutes of Technology barred around 30 start-ups from campus placements because they either abruptly rescinded on offers or, as the IITs felt, were unprofessional in their claims about fancy salaries or outlandish hiring plans. The latter part, it’s suspected, may have to do with getting an early slot in the placement process along with well-established firms and it hasn’t gone down well with IITs. By one account, close to 200 students from across 10 IITs, who were given offers by start-ups in the last placements season, were affected because of delayed joining dates or firms simply going back on their offers.