The startup ecosystem funding winter could continue for another 12 to 18 months, and the industry could grapple with “a lot of uncertainty and volatility,” said the e-commerce giant’s chief executive. Flipkart’s founder, Kalyan Krishnamurthy, warned executives.
“This is going to be difficult next year. My estimate is that a lot of startup founders will hit the market between April and June next year, and that’s the moment of truth for the ecosystem,” he said at a meeting. over the weekend organized by the Economic Times of India.
Typically a reserved and soft-spoken executive, Krishnamurthy told hundreds of attendees that startup founders should embrace restructuring their companies. Do many startup founders willing to cut hair on their previous valuation in new funding discussions, investors say.
Some startup founders believe they won’t be able to attract and retain talent if a sudden funding event causes an employee’s existing stock to become less valuable.
“In 2001, companies saw valuations increase 2 to 6 times with some basic assumptions about growth and profitability over the next two to three years. I think it quickly became clear that those assumptions weren’t going to happen,” Krishnamurthy said, describing the push to fund startups in India last year.
Indian start-up raised a record $39 billion in 2021 as active investors look to double down in emerging markets. In contrast, when the market reserved its position earlier this year, funding for the quarter ended September slide below 3 billion dollars.
And that means an introspection of what needs to be done to survive, he said.
Krishnamurthy, who previously worked at investment outlet Tiger Global, famously helped architect Flipkart cut 30% of its workforce five years ago to make the company more efficient. “We grew from there, so that’s not a problem,” he said.
Flipkart is owned by Walmart, finally worth 37.6 billion USD, which froze hiring earlier this year and halted acquisitions, which it previously spent about half a billion dollars to expand into its online travel and healthcare categories. The company – which includes SoftBank, Tiger Global, GIC, the Canada Pension Plan Investment Council, Qatar Investment Authority, Tencent and Franklin Templeton among backers – has no plans to go public for at least a year.
