Start-ups, once awash with funding, are now struggling to survive as investors become more discerning. Venture capitalists are increasingly scrutinising business models and profitability, leading to a decline in investments. In the first quarter of 2017, funding fell by 28% in the U.S. and 10% globally. This trend is forcing many start-ups to either cut costs or seek alternative funding sources.
Among the affected companies is Shuddle, a ride-hailing service for children, which closed down in 2016 due to a lack of funding. It’s a similar story for companies like HomeHero, a home-care marketplace, and PepperTap, an Indian grocery delivery service.
However, not all start-ups are suffering. Those with proven business models and profitability are still attracting investors. For instance, Snap Inc. managed to raise $3.4 billion in an initial public offering in March 2017.
Overall, the landscape for start-ups is becoming tougher. The days of easy money are over, and only the fittest will survive in this new, more discerning investment environment.
Go to source article: https://www.wsj.com/articles/once-flush-startups-struggle-to-stay-alive-as-investors-get-pickier-1492948802?mod=e2twd