India's startup ecosystem, ranked the world's third-largest, is experiencing significant shifts. Funding is gradually rebounding after a prolonged downturn, yet the sky-high valuations of 2022 are a thing of the past.

Take ShareChat, once viewed as a direct rival to Meta’s Facebook in India. It garnered attention from global heavyweights like Google and Twitter (X), among others. Previously valued at over $5 billion, ShareChat recently secured a convertible debt round that saw its valuation shrink to $2 billion, as per media reports.

ShareChat is far from the only startup suffering these corrections. Numerous startups, particularly those that surged during the pandemic, are facing a sobering reality. Companies such as Byju’s and Pharmeasy have been forced to resort to rights issues at significant discounts, while Udaan, alongside ShareChat, turned to convertible debentures to mitigate valuation losses. GreyOrange, a robotics startup, similarly secured funding in December last year at a significantly lower valuation than when it raised funding in May 2022.

These struggles stem from macroeconomic shifts, internal challenges, or even a combination of the two, justifying the valuation adjustments. However, even companies such as Meesho and HealthKart, which have been resilient even after the pandemic and have significantly reduced their cash burn while still maintaining steady growth, have struggled to attract buyers at premium valuations.