Startups selling at discounts of 30-40%, says Family Office to Infosys co-founder Narayana Murthy; warns on startup valuations

In an assessment of the Indian startup ecosystem, Catamaran Ventures LLP, the family office of Infosys co-founder Narayana Murthy, has raised concerns over the inflated startup valuations and also revealed that many startups are still being sold at 30 to 40% discount. Catamaran president, Deepak Padaki told Bloomberg that many startups lack clear paths to profitability and are being offloaded by funds which leads to end of their investment cycles. “Funds that invested in these companies want to sell their investments because they are reaching the end of their fund terms,” Padaki said, adding that Catamaran is steering clear of turnaround-heavy deals.

Valuation bubble deflates

India’s startup scene, once buoyed by pandemic-era funding surges that peaked at $38.5 billion in 2021, has seen a sharp correction. While deal activity has rebounded slightly in 2024 to $13.7 billion, investors are now scrutinizing growth metrics and profitability more rigorously.High-profile examples like Oyo Hotels, once valued at $10 billion, illustrate the volatility. The company has faced stiff competition and delayed its IPO multiple times, despite a partial recovery.The warning reveals the new reality of India startup ecosystem. As per the family office, many VC firms are focusing on making a secure exit and are also willing to offload their stakes at a considerable loss. This change indicate that the investors have shifted their focus from aggressive growth at any cost to only profitability.

Catamaran’s strategic pivot

Catamaran which manages $1.3 billion for Infosys co-founder Narayana Murthy and also holds stakes in companies like SpaceX and National Stock Exchange of India is now shifting its focus towards manufacturing and supply chain-driven enterprises. The company is also helping some small and medium businesses in scaling their operations in various sectors such as aerospace, EVs, electronics and medical devices. Panaji stressed on the fact that India has a small window to capitalise on its cost effective nature. “As a family office with the potential to deploy more patient capital, manufacturing fits aptly with what we want to do,” he said.