February 2, 2023

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Flipkart boss warns startups of turbulence and funding shortages for another 12 to 18 months • TechCrunch

The funding winter for the startup ecosystem could last another 12 to 18 months, and the industry may have to deal with “a lot of turbulence and volatility,” Kalyan Krishnamurthy, CEO of e-commerce giant Flipkart, has warned executives.

“It’s going to be tough next year. My estimate is that many startup founders will come to market between April and June next year and this is the moment of truth for the ecosystem,” he said at a weekend rally organized by Indian newspaper Economic Times .

Usually a reserved and reserved executive, Krishnamurthy told hundreds of attendees that startup founders should take a down-round and restructure their companies. Many startup founders aren’t willing to sacrifice their previous valuations when considering new funding, investors say.

Some startup founders believe they won’t be able to attract and retain talent if a funding event suddenly makes employees’ existing shares less valuable.

“In 2001, companies saw a 2x to 6x increase in valuation with some underlying growth and profitability assumptions over the next two to three years. I think it quickly became clear that these assumptions will not come true,” said Krishnamurthy, describing the surge in startup funding in India over the past year.

Indian startups raised a record $39 billion in 2021 as investors aggressively sought to double their investments in emerging markets. In contrast, as the market reserved its position earlier this year, funding slipped below $3 billion in the quarter ended September.

And that means an introspection about what needs to be done to survive, he said.

Krishnamurthy, who previously worked at investment house Tiger Global, famously helped architect Flipkart reduce its workforce by 30% five years ago to help the company become more efficient. “We’ve grown from there, so that’s not a problem,” he said.

Walmart-owned Flipkart, which was last valued at $37.6 billion, imposed a hiring freeze earlier this year and halted its acquisition spree that had previously seen it spend about half a billion dollars to enter categories online – Expand healthcare and travel. The company, whose backers include SoftBank, Tiger Global, GIC, Canada Pension Plan Investment Board, Qatar Investment Authority, Tencent and Franklin Templeton, does not plan to go public for at least a year.