The economic slowdown is finally catching up with the startup economy. DSG Consumer Partners, an investor in startups such as Oyo, Raw Pressery, Chai Point, has sent out a letter to its portfolio companies with a warning - winter is here!

In a letter sent to founders on November 21, DSG Consumer Partners MD Deepak Shahdadpuri put forth a stark warning, stating that the weak consumer sentiment was impacting the risk appetite of VC funds.

He also cited that several discussions of funding and M&A in the startup sector had fallen through in the last several weeks.

He said that in some cases, this has led to job cuts and cost rationalisation.

"We are witnessing a rapid decline in risk appetite from VC funds. This is a sharp contrast to the market sentiment only six months ago. In the last three weeks, we have seen five different fund-raising rounds or M&A discussions collapse post-term sheet and pre-closing. In some cases, this has led to job cuts and deep cost rationalisation. Some within the portfolio and some outside. Many more start-ups aren’t even getting a term sheet," the DSGCP letter spelt out.

Shahdadpuri also added that they expect to see a number of casualties in the market in the next 6-9 months.

Moreover, DSG warned of valuations corrections, citing that they are seeing a 30-50 percent reduction in the multiples being applied​.

Laying down some tips for startups, DSG has asked founders to conserve cash and focus on profitability.

"The strong companies have always been disciplined but many first-time founders make the mistake of chasing top-line growth at any cost often spending too much on marketing, customer acquisition and discounting. The focus has to be on capital-efficient growth," the VC said.

"Raise capital today. As weak competitors struggle in a slowing market, stronger brands with strong unit economics can take the opportunity to take market share... Build a business to be profitable. Look at your P&L and ensure that each cost item is justified and required; if not take out those costs today.​"

Some of DSGCP's portfolio startups include Raw Pressery, Epigamia, Sula Wines, Baker's Circle, Eazydiner, India Lends, Mswipe, Oyo, and ChaiPoint.

This is one of the first formal warnings from the investor community to startups, which have otherwise seen no dearth in funding this year despite the slowdown. Matrix Partners India head Avnish Bajaj told CNBC-TV18 last week that startups could be hit by a slowdown in 2020 if consumer sentiment does not pick up.