The slowdown has occurred despite favorable conditions: The broader Indian economy is booming, and inflation is low. Global investors are on the hunt for the next Facebook (FB, Tech30) or Amazon (AMZN, Tech30).

With 1.3 billion citizens and a surplus of skilled IT workers, Indian startups proved irresistible to many investors. The success of homegrown e-commerce darlings Snapdeal and Flipkart, and ride-sharing app Ola, added credibility.

Yet there is a simple explanation for the reversal: Investors say India’s tech sector experienced a classic bubble, similar to the one that rocked Silicon Valley when it burst in 1999.

“I think India is going through its first bubble,” said Kashyap Deorah, a former Silicon Valley entrepreneur who now runs a startup in Delhi. “It is a bubble and it is normal.”

After a sustained funding frenzy, India’s tech startups are laying off employees and some have closed up shop altogether.

Source: India’s startup bubble has already burst – Oct. 13, 2016

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