Startup funding winter takes a toll on vendors

livemint.com:

BENGALURU : Byju’s, Dunzo and a bunch of other startups are in a standoff with some vendors, mostly over charges of delayed payments likely arising from mounting financial constraints within the ecosystem. These companies on their part deny the charges, in several instances accusing the vendors of straying from the terms of their contracts, or citing contractual disagreements for non-payments. Vendors, lawyers and industry observers pointed to an increase in cases of defaults or delayed payments last year as several startups struggled to raise capital.

Matters came to a boil when the Board of Control for Cricket in India in November moved the National Company Law Tribunal against Think & Learn Pvt. Ltd, the parent company of embattled ed-tech firm Byju’s, over non-payment of sponsorship dues amounting to ₹158 crore. Byju’s has since sought to settle the dispute through arbitration.

Last week, France-based Teleperfomance Business Services also filed an insolvency plea with NCLT in Bengaluru against the ed-tech firm. As funding dwindles amid an extending funding winter, a noticeable rise in payment delays and defaults by startups is evident, said Raghav Dhoot, founder of Avyay, a startup advisory firm with more than 80 startup clients. “While past delays were linked to issues like invoice reconciliation and internal procedural issues, the recent surge is primarily attributed to cash crunch," said Dhoot.