The funding winter for the startup ecosystem could proceed for one more 12 to 18 months and the business might need to grapple with a “lot of turmoil and volatility,” e-commerce large Flipkart chief govt Kalyan Krishnamurthy has warned executives.
“This is going to be tough next year. My estimate is that a lot of startup founders will hit the market between April to June next year, and that’s the moment of truth for the ecosystem,” he mentioned at a gathering over the weekend organized by Indian newspaper Economic Times.
Typically a reserved and soft-spoken govt, Krishnamurthy instructed lots of of attendees that startup founders ought to embrace a down-round and restructure their corporations. Many startup founders should not wiling to take a haircut on their earlier valuations in new funding deliberations, traders say.
Some startup founders consider that they will be unable to draw and retain the expertise if a funding occasion out of the blue makes the staff’ present shares much less invaluable.
“In 2001, companies saw a 2x to 6x spike in valuation with some underlying growth and profitability assumptions for the next two to three years. I think it quickly became clear that those assumptions are not going to play out,” mentioned Krishnamurthy, describing the enhance to startup funding in India final 12 months.
Indian startups raised a document $39 billion in 2021 as traders aggressively regarded to double down in rising markets. In distinction, because the market reserved its place earlier this 12 months, funding within the quarter that led to September slid under $3 billion.
And which means an introspection on what must be performed to outlive, he mentioned.
Krishnamurthy, who beforehand labored on the funding store Tiger Global, famously helped architect Flipkart minimize its workforce by 30% 5 years in the past to assist the agency turn into extra environment friendly. “We grew from there, so it’s not a problem,” he mentioned.
Walmart-owned Flipkart, final valued at $37.6 billion, put a hiring freeze earlier this 12 months and halted its acquisition spree, which earlier noticed it spend about half a billion {dollars} to increase into on-line healthcare and journey classes. The agency — which counts SoftBank, Tiger Global, GIC, Canada Pension Plan Investment Board, Qatar Investment Authority, Tencent and Franklin Templeton amongst its backers — doesn’t plan to go public for not less than a 12 months.