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Omidyar Network ceases India operations, halts fresh investment initiatives.

Writer's picture: RISHI KORDERISHI KORDE



Omidyar Network India, an entity that separated from its parent company in 2019, is ceasing its operations in the country and discontinuing new investments. The decision, set to be implemented by the end of 2024, follows a thorough deliberation period. The organization's board and leadership team will evaluate how to manage its existing portfolio during the next two months, acknowledging the strong and enduring partnerships cultivated by the Omidyar Network India team.

Originally backed by eBay founder Pierre Omidyar, the local unit concentrated on supporting Indian startups. Notable investments include Tata 1mg, Bounce, Centa, CloudSek, DealShare, Kiwi, Otipy, Doubtnut, and others. Recently, it spearheaded a $6 million funding round for Digivriddhi Technologies, a fintech startup serving the dairy industry. According to a TechCrunch report, the investor possessed approximately $673 million in cumulative assets in India.

The decision to wind up operations is attributed to significant contextual changes and the evolving economic landscape since the team's initial investments in 2010. The statement highlighted the current abundance of Indian-led philanthropic and venture capital, a thriving startup sector, and various funds now prioritizing middle and lower-middle-income ventures in their investment strategies. Omidyar Network India identified these systemic shifts early on and actively contributed to catalyzing such changes.

Although the official statement does not explicitly detail the reasons behind the move, it is speculated that underperforming portfolio companies may have influenced the decision. Notably, Doubtnut was acquired by Allen Career Institute for $10 million in what is perceived as a distress deal, despite having raised $50 million in previous funding rounds. Additionally, high-profile investments like Bounce and Dealshare are still grappling to establish sustainable business models.

The broader startup landscape has witnessed heightened intensity, with many companies resorting to drastic measures such as job layoffs and controlled expenses to navigate challenges. Some, like ZestMoney, have even shut down amid what is termed as a "funding winter."

It's noteworthy that the Omidyar group had faced scrutiny from the Indian government over alleged unauthorized foreign funding. In 2021, Omidyar Network International was one of ten American, Australian, and European NGOs barred from funding.

The decision to wind up operations in India could also be influenced by the challenges faced by some of Omidyar Network India's portfolio companies. For instance, the acquisition of Doubtnut by Allen Career Institute for $10 million, despite its previous funding rounds totaling $50 million, suggests possible struggles within the portfolio. Similarly, ventures like Bounce and Dealshare, touted as promising bets, are still in the process of establishing sustainable business models.

The overall startup landscape has become increasingly competitive, prompting numerous companies to adopt stringent measures to ensure survival. This includes measures like job layoffs and stringent cost controls. Notably, even well-established firms like ZestMoney have had to shut down operations amid what is colloquially termed a "funding winter."

Adding to the complexity, the Omidyar group has faced scrutiny from the Indian government over allegations of unauthorized foreign funding. In 2021, Omidyar Network International found itself among ten American, Australian, and European NGOs that were restricted from funding activities in India.


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