Before the Adani vs Hindenburg fiasco led to a crash in the group's stocks and triggered downgrading of its shares as well as probes globally, India's business landscape was hit by other cases of irregularities. GoMechanic became the fourth Sequoia-funded startup caught pulling off a scam, by global audit firm Ernst & Young. These cases of financial irregularities among others will probably blemish the credibility of Indian businesses among investors, according to research firm Tracxn.
Investors holding back
The report by Tracxn mentions the Adani files and GoMechanic scandal as two major dampeners for startup funding, which has dropped by 50 per cent. Investors are reportedly holding dry powder worth $590 billion, which means the amount that is committed but not allocated. Apart from GoMechanic and Adani fiascos, BharatPe's allegations of embezzlement against its co-founder also hit the headlines.
Global partners wary
After allegations against Adani and the stock market rout that followed, its French partner TotalEnergies also put a green hydrogen project on hold. The conglomerate has been trying to reassure investors by prepaying loans and hiring a law firm in New York to counter the Hindenburg report. But this hasn't stopped its market cap from shrivelling below Rs 10 lakh crore.
Startup ecosystem to suffer
GoMechanic on the other hand was caught inflating revenue, while another Indian startup had reported a massive loss after revising its methods for calculating income.
Such controversies affecting firms including the group led by India's wealthiest man, have could seriously dent funding for Indian startups, which did she a marginal recovery of 3 per cent between December 2022 and January 2023.
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