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India’s ecommerce boom appears to be slowing as venture capitalists and investors adopt a more cautious approach to evaluating the net worth of major ecommerce sites there.

The restaurant search site Zomato has just seen its valuation by HSBC Securities and Capital Markets (India) Pvt Ltd cut in half, while Flipkart’s net worth has also been re-evaluated downwards, from £10 billion to £7.6 billion.

HSBC has expressed reservations about Zomato’s business model, which relies heavily on advertising in order to position itself as a brand leader in the restaurant search sector, where it is snapping at the heels of global frontrunner Yelp.

Zomato’s leading shareholder, Info Edge, disagreed with HSBC’s evaluation, saying that it believes the site is well on its way to profitability. Sanjeev Bikhchandani, Founder and Executive Vice-Chairman of Info Edge, has pointed out that Zomato’s revenue has more than doubled over the last nine months and continues to increase.

Flipkart have also reacted to its investors’ reports, downplaying their importance by saying that as they are not currently trying to raise funding, and that they therefore represent nothing more than a shareholder opinion. But as several commentators have pointed out, this is an unusually subdued statement from Flipkart, a company normally well-known for its brash self-confidence.

The lack of investor confidence is a worldwide phenomenon, and by no means confined to India. In April 2016, Chair of the United States Securities and Exchange Commission, Mary Jo White, called for caution regarding startups valued at over $1 billion (around £700 million). Such firms are dubbed “unicorns” because they were once thought to be mythical. White has warned that such high valuations can lead to companies putting on a front in order to appear more valuable than they actually are.

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