Atlanta, Georgia-based VC firm Invesco marked down portfolio firm Swiggy's valuation by 48.6% to $5.5B at the end of January 2023, per filing documents seen by TechCrunch. This is the second time that Invesco has slashed Swiggy's valuation, previously reducing it from $10.7B to $8.2B last October. Invesco had led a $700M Series J funding round into the Indian food delivery startup in January 2022.
After the news about Swiggy's valuation markdown came to light, stocks of its publicly traded competitor, Zomato, dropped by 6%, wiping away $400M in market capitalization. Zomato's stock prices ended the trading day at $0.74 (60.94 Rupees) per share, giving it a current market cap of ~$6.78B. Zomato had a market cap of over $13B when it went public in July 2021.
Indian startups could postpone a reassessment of their valuations by opting to raise capital via convertible notes or venture debt. However, this year the true impact of volatile global market conditions on the valuations of Indian startups is expected to come to light.
In March 2023, BlackRock nearly halved the valuation of India's most valuable startup Byju's, from $22B to $11.5B. Recent filing documents seen by TechCrunch show that Fidelity has maintained the valuations of its portfolio of Indian startups Meesho and Pine Labs.
Due to the macroeconomic headwinds, startups globally are looking at valuation cuts. Last year, Tribe Capital marked down cloud-based machine startup Invenia's valuation by 95%. Stripe has had three valuation markdowns since its peak valuation of $95B in March 2021. The firm's internal valuation is currently $50B, down 47% from the peak. Buy-now-pay-later platform Klarna's valuation dropped 86% when it raised a down round late last year. Fast-fashion startup Shein lowered its internal valuation from a peak of $100B to $64B. Fitness equipment maker Tonal's valuation dropped 90% when it raised a "cram down" round in March 2023.
In Q1 2023, the average pre-money valuation of U.S.-based late-stage startups declined by $120M to $159.1M . At the end of last year, Series D valuations had dropped 58% compared to the previous year. Pitchbook expects the downward valuation trend to continue this year. Startups typically raise fresh funding every 18 months. Several startups that were able to avoid fundraising in the last year will be in the market on the lookout for new funds and will likely have to accept lower valuations. SoftBank founder and CEO Masayoshi Son warned that the funding retrenchment might stretch longer if founders were unwilling to accept lower valuations.
Startups that have previously raised funding at inflated valuations in 2021 will have trouble growing into "sky-high" valuations, per Pitchbook. IVP's general partner Ajay Vashee added, "I think we are back at 2017 levels, just as public markets have reverted to 2017 [prices]." Median valuation multiples of SaaS late-stage startups analyzed by IVP was 114.3x ARR, seven times the 15x multiple fetched by similar firms in 2017. Valuation multiples were declining for all stages, per Carta.