<p>Indian drug and medical services startup PharmEasy is in talks with investors to raise $200 million, but at a valuation that could be 15% or even 25% lower than last year's $5.1 billion, two people with direct knowledge of deal talks told Reuters.</p>.<p>Signalling growing stress in India's startup ecosystem, one source said PharmEasy, backed by big-name investors such as Prosus, TPG and Temasek, is in talks to secure the new funds at a valuation as much as 15% below last year's.</p>.<p>A second source said the company, which offers online medicine deliveries and diagnostic test services, has told its bankers to consider even a 25% reduction if needed to close the deal. That could cut PharmEasy's valuation for the new funding round to $3.8 billion, and the sources said an initial public offering (IPO) first targeted for 2022 has been delayed.</p>.<p>Indian startups have been jolted by uncertain global and domestic stock markets, and growing investor scepticism over what they say are sky-high valuations, making it difficult for PharmEasy to raise funds at the same or a higher valuation, sources said. They declined to be named as the talks on raising funds were private.</p>.<p>PharmEasy's planned fundraising is set to see participation from some existing investors, who have indicated they will commit about $115 million in the new round, said the first source involved in the talks.</p>.<p>API Holdings, PharmEasy's parent company which is looking to raise the funds, declined to comment. API owns other businesses including diagnostic test provider Thyrocare.</p>.<p>The company had seen its valuation jump in recent years in a boom moment for India's startups in general and a growth surge in its own sector, where rivals include Reliance's Netmeds, Tata's 1mg and Walmart's Flipkart.</p>.<p>Last year, Indian startups raised a record $35 billion in private funding and many internet companies went public. PharmEasy, too, cashed in on the boom and raised a total of $1.89 billion since 2015, with most of it coming in the last two years, data from Pitchbook shows.</p>.<p>Among high-profile Indian startups, a 'down round' deal by PharmEasy's - when a firm sells shares at a lower valuation than before - will be the first in recent times.</p>.<p>Bank of America Securities and Morgan Stanley are working on the deal, said the sources. Morgan Stanley declined comment, while Bank of America did not respond.</p>.<p><strong>IPO on hold, mounting losses</strong></p>.<p>Betting on higher healthcare spends and growing use of online ordering, API Holdings last year filed a prospectus to raise 62.5 billion rupees ($782 million) in an IPO, hoping to list in 2022. The sources confirmed that plan is now delayed.</p>.<p>One concern among investors before the market debut is mounting losses of the digital pharmacy, the sources said.</p>.<p>PharmEasy's parent saw its total income more than double to $714 million in the fiscal year to March 2022.</p>.<p>But total expenses for the period amounted to $1.06 billion, partly due to a one-time employee stock benefits outlay, according to a document viewed by Reuters that listed PharmEasy's latest unaudited financials.</p>.<p>The net loss for the year quadrupled to $334 million, the document stated.</p>.<p>PharmEasy is currently in a "wait and watch" mode and considering listing next year, the first source said. A third person with knowledge of the matter also said the IPO may only take place late in 2023, and PharmEasy's parent may be required to refile IPO regulatory papers.</p>.<p>The IPO delay comes as stocks of prominent Indian listings of last year, such as digital payments firm Paytm and food-delivery firm Zomato, have fallen more than 60% from their peaks.</p>
<p>Indian drug and medical services startup PharmEasy is in talks with investors to raise $200 million, but at a valuation that could be 15% or even 25% lower than last year's $5.1 billion, two people with direct knowledge of deal talks told Reuters.</p>.<p>Signalling growing stress in India's startup ecosystem, one source said PharmEasy, backed by big-name investors such as Prosus, TPG and Temasek, is in talks to secure the new funds at a valuation as much as 15% below last year's.</p>.<p>A second source said the company, which offers online medicine deliveries and diagnostic test services, has told its bankers to consider even a 25% reduction if needed to close the deal. That could cut PharmEasy's valuation for the new funding round to $3.8 billion, and the sources said an initial public offering (IPO) first targeted for 2022 has been delayed.</p>.<p>Indian startups have been jolted by uncertain global and domestic stock markets, and growing investor scepticism over what they say are sky-high valuations, making it difficult for PharmEasy to raise funds at the same or a higher valuation, sources said. They declined to be named as the talks on raising funds were private.</p>.<p>PharmEasy's planned fundraising is set to see participation from some existing investors, who have indicated they will commit about $115 million in the new round, said the first source involved in the talks.</p>.<p>API Holdings, PharmEasy's parent company which is looking to raise the funds, declined to comment. API owns other businesses including diagnostic test provider Thyrocare.</p>.<p>The company had seen its valuation jump in recent years in a boom moment for India's startups in general and a growth surge in its own sector, where rivals include Reliance's Netmeds, Tata's 1mg and Walmart's Flipkart.</p>.<p>Last year, Indian startups raised a record $35 billion in private funding and many internet companies went public. PharmEasy, too, cashed in on the boom and raised a total of $1.89 billion since 2015, with most of it coming in the last two years, data from Pitchbook shows.</p>.<p>Among high-profile Indian startups, a 'down round' deal by PharmEasy's - when a firm sells shares at a lower valuation than before - will be the first in recent times.</p>.<p>Bank of America Securities and Morgan Stanley are working on the deal, said the sources. Morgan Stanley declined comment, while Bank of America did not respond.</p>.<p><strong>IPO on hold, mounting losses</strong></p>.<p>Betting on higher healthcare spends and growing use of online ordering, API Holdings last year filed a prospectus to raise 62.5 billion rupees ($782 million) in an IPO, hoping to list in 2022. The sources confirmed that plan is now delayed.</p>.<p>One concern among investors before the market debut is mounting losses of the digital pharmacy, the sources said.</p>.<p>PharmEasy's parent saw its total income more than double to $714 million in the fiscal year to March 2022.</p>.<p>But total expenses for the period amounted to $1.06 billion, partly due to a one-time employee stock benefits outlay, according to a document viewed by Reuters that listed PharmEasy's latest unaudited financials.</p>.<p>The net loss for the year quadrupled to $334 million, the document stated.</p>.<p>PharmEasy is currently in a "wait and watch" mode and considering listing next year, the first source said. A third person with knowledge of the matter also said the IPO may only take place late in 2023, and PharmEasy's parent may be required to refile IPO regulatory papers.</p>.<p>The IPO delay comes as stocks of prominent Indian listings of last year, such as digital payments firm Paytm and food-delivery firm Zomato, have fallen more than 60% from their peaks.</p>