Indian startups must brace for a long funding winter: Flipkart CEO

Krishnamurthy told the gathering that startup founders should embrace a down-round and restructure their firms.

Reuters image

The startup ecosystem's funding winter could last another 12 to 18 months and the industry may face "a lot of turmoil and volatility", warned Flipkart CEO Kalyan Krishnamurthy.

"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," Krishnamurthy said during an event organised by The Economic Times.

Krishnamurthy told the gathering that startup founders should embrace a down-round and restructure their firms.

TRENDING NOW

"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," Krishnamurthy told the audience.

READ | Flipkart burns over USD 3.7 billion cash in about a year till September 2022

Last month, a PwC India report showed that only two startups in India, Shiprocket and OneCard, attained unicorn status (valuation of $1 billion and above) in the July-September period.

The global slowdown in funding continues with start-up funding in India in Q3 hitting a two-year low at $2.7 billion across 205 deals.

"It is tough to predict how long the slowdown in funding will last but clearly, both founders and investors are being more selective and cautious in deal-making. In general, early-stage start-ups will be able to raise capital more easily as they are typically more insulated than late-stage deals from fluctuations in the public markets," explained Amit Nawka, Partner-Deals and India Startups Leader, PwC India.

Nearly 16,000 employees have been laid off by more than 44 startups to date, led by the edtech companies like BYJU'S, Unacademy, Vedantu and the rest amid the startup funding winter.

Funding in Indian startups has constantly declined since the start of 2022.

Despite raising $4.6 billion in January, Indian startups raised only $1.3 billion in October, a significant improvement over the previous month but a far cry from October 2021.

Click Here For Latest Updates On Stock Market | Zee Business Live

TAGS:

Indian startups Flipkart