In India, the startup wave is going on from last two years (approx), where initially, low hanging fruits were there and some tech people or group needed to just have a Minimum Viable Project (MVP) and a little bit of traction, and accordingly the funded was given by the Venture Capital fund (VCs) or by angel Investors easily. However, there is a shift in this scenario going on, where, now, the funders are tightening the knob of tap and not allowing every qualify proposition to get funded unless there is a ‘cash positive’ scenario or growth along with other relevant factors like potential to scale up, good management team, etc, are present. Infact, the cases, which have already received the initial pre seed or seed funding or series A level funding from VCs or angels investors, are being critically scrutinized by the investors before next round of funding is given. The scenario has been started and the light of it can be seen in few cases like Tiger Global has latest told recently in a particular reference that it is currently having a portfolio of approx 20 startups at different stages and they will give next round funding to few who will qualify on their parameters. The scenario is taking heat and infact; other VCs have also started tightening the money tap.

People are usually surprised by the valuations being done in case of startups and also wonder that how the investors are just betting on them with huge valuations knowing the fact that the fundamentally they don’t have much to show on paper or convince them. ‘Startup valuation’ is more of an artistic work than scientific. Further, it depends on the stage of startup. However, it is mainly the equity dilution which the founders or promoters will give to Funders like Venture capitalist or angel investor (depending upon the stage as well) against the funding being taken, and accordingly the valuations i.e. Pre or Post money valuation is being derived. Whenever a startup goes for the initial or next round of funding, some equity stake is given to the funders against the funds provided by them, but do such valuations really specify the worth of it? Or is it a myth? There are various opinions from experts in this regard. However, I would illustrate the same as myth. In other words, the valuations at whatever level of funding (except IPO) is being derived, is myth until unless the Startup company either goes for the Initial public offer (IPO) or Exit or buyout. This could be seen in very recent examples like ‘Food panda’ where the valuations were reach to mount high due to funding being infused into it against the stake firms or investors took but now when it is looking for complete exit or sellout, they are not being able to find the buyer for even reduced or lower price. There are few more examples like ‘Food panda’.

Further, India is a consumer market and one needs an idea which, if gets ‘hit’, can make him a Millionaire or Billionaire. However, currently in India, there is lack of new innovations especially in case of startups and people are trying to cover the gap of current infrastructure & Opportunity by taking the already established concepts or models (whether mobile application based or web based) from abroad and implementing the same by creating a product here. Though it is being able to get the traction and gaining success