Flipkart chief warns startups of turmoil and funding crisis for another 12 to 18 months


The funding winter for the startup ecosystem could last another 12 to 18 months and the industry could struggle with “a lot of turmoil and volatility,” e-commerce giant Flipkart chief executive Kalyan Krishnamurthy warned executives.

“This is going to be difficult next year. I estimate that many startup founders will enter the market between April and June next year, and that is the moment of truth for the ecosystem,” he said at a meeting over the weekend organized by the Indian newspaper Economic Times.

Typically a reserved and soft-spoken manager, Krishnamurthy told hundreds of attendees that startup founders need to embrace a down-round and restructure their companies. Many startup founders are unwilling to lower their previous valuations in new funding deliberations, investors say.

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

“In 2001, companies saw a 2x to 6x spike in valuation with some underlying assumptions for growth and profitability over the next two to three years. I think it quickly became clear that those assumptions don’t hold true,” said Krishnamurthy, describing the boost to seed funding in India last year.

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Indian startups raised a record $39 billion in 2021 as investors aggressively seek to double down in emerging markets. By contrast, when the market reversed its position earlier this year, funding fell below $3 billion in the quarter ended September.

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

Krishnamurthy, who previously worked at investment store Tiger Global, five years ago helped architect Flipkart cut his workforce by 30% to make the company more efficient. “We’ve grown from there, so it’s not a problem,” he said.

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Walmart-owned Flipkart, last valued at $37.6 billion, halted hiring earlier this year and halted the wave of acquisitions, previously spending about half a billion dollars to expand into online healthcare and travel categories. The company – which counts SoftBank, Tiger Global, GIC, Canada Pension Plan Investment Board, Qatar Investment Authority, Tencent and Franklin Templeton among its backers – does not plan to go public for at least a year.


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