Startups rushing to raise more funds at higher valuations risk a difficult situation amid the current liquidity crunch as it narrows equity upside, said Zerodha CEO and co-founder Nithin Kamath. Liquidation preferences, which allow investors to recover their investment before anyone else in a business, need to be fine-tuned to match underlying fundamentals to succeed, he added. Kamath pointed out the discrepancy between uneven valuations and the market’s fundamentals, which may prompt founders and leaders at late-stage startups to exit, potentially putting their firms’ survival at risk. Kamath’s comments come as fundraising for Indian startups falls to its lowest in four years.