Why 2016 will be the best of times and the worst of times for India’s startups

PepperTap today became the latest startup to join the “we’re scaling back” club, in a reminder that India’s booming ecosystem is in for some major adjustments this year.

A PepperTap spokesperson confirmed the move, but did not respond to an email seeking comments.

PepperTap joins the likes of Zomato, Foodpanda, Housing, and Grofers in pulling out of cities or categories that weren’t showing growth, but the industry doesn’t seem shocked any more. Indeed, like one investor joked, it is almost as if scaling back is the new norm in the startup world – if you’re not doing it yet, you just have not recognized there is a problem.

That investor did not want to be named because he is not authorized to speak to the media.

See: After Grofers, Zomato shuts delivery in India’s small cities

In many ways, PepperTap and the others’ decisions are reflective of what 2016 is going to look like for Indian startups. That easy, come-as-you-may money isn’t going to be around anymore.

However, investors swear that deserving ideas will get the backing they need.
Indeed, startups seem to be finding favor with even institutionalized names like Ratan Tata, not to mention seed funds and VCs.

That, then, is the lot of any maturing industry. It’s going to be the best and worst of times for an industry that saw some unbridled “growth for all” in the past three or four years, but is slowly waking up to the realities of scalability.

Everybody is bleeding

“In the beginning there was an idea and that idea got funded. Everybody expanded , not due to their own reasons but because the investors wanted them to expand,” Harish Bijoor, brand expert and founder of Harish Bijoor Consults, said.

“Now everybody is correcting, because everybody is bleeding and they need to fix it.”

None of the leading names in the industry in India are in the black yet, but the past few years have seen a dizzying array of expansion, growth, sales, and hiring headlines. And there’s a disconnect in the way many companies measure growth or set sales expectations as well.

Growing up