How US tech sell-off will affect Indian startups

How US tech sell-off will affect Indian startups

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Madhav Chanchani

121 reads
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Madhav Chanchani

121 reads

High-growth tech stocks are seeing a correction and this is shrinking the risk appetite of global investors that back Indian startups. While the funding wave will continue, founders may have to check their expectations of monster valuations

December 06, 2021

5 MINS READ

The Freshworks stock has quietly slumped by nearly 47% from its highest point on Nasdaq about a month ago. More importantly, it is down by around 20% from the public offering price of $36. At the closing bell last Friday, the share price was $28.46.

The fall in Freshworks’ market capitalisation comes as part of a broader sell-off in high-growth technology stocks in the US led by software or cloud computing players. 

Video-conferencing company Zoom and e-signature firm DocuSign, which emerged as winners during the pandemic, have suffered a drop of 35% and 52%, respectively, over the past month. Their growth has slowed as the US economy moves beyond work from home, a prediction a top venture capitalist had shared with The CapTable months ago.

Even Salesforce, the largest cloud computing player, has seen a 16% decrease in the same period.

Hit zone: It’s not just software companies. The share prices of food delivery company DoorDash and ride-hailing firm Uber are down by 24% and 20%, respectively. Tech giants Google, Microsoft and Facebook have also felt the pinch. 

ARK Innovation Exchange Traded Fund (ETF), which bets specifically on high-momentum tech companies, has fallen by 25% this year, even though the broader market is up by 21%, according to WSJ

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