Flipkart boss warns startups of turmoil and financial crisis for another 12 to 18 months

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

“It’s going to be tough next year. My assessment is that a lot of startup founders will go public between April and June next year, and that’s the moment of truth for the ecosystem,” he said at a weekend meeting organized by India’s Economic Times newspaper.

Normally a low-key and soft-spoken CEO, Krishnamurthy told hundreds of attendees that startup founders should give up and restructure their businesses. Many startup founders are not willing to lower their previous estimates in new financing discussions, investors say.

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

“In 2001, companies saw a 2x to 6x jump in valuation with some underlying growth and profitability projections for the next two to three years. I think it quickly became clear that those assumptions were not going to pan out,” Krishnamurthy said, describing the surge in startup funding in India last year.

Indian startups raised a record $39 billion in 2021 as investors aggressively sought to double down on emerging markets. In contrast, as the market held its ground earlier this year, funding in the quarter that ended in September fell below $3 billion.

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

Krishnamurthy, who previously worked at investment shop Tiger Global, is known for helping architect Flipkart cut its workforce by 30% five years ago to help the firm become more efficient. “We grew out of there, so it’s not a problem,” he said.

Flipkart owned by Walmart last is estimated at $37.6 billion, froze hiring earlier this year and halted its acquisition spree in which it previously spent about half a billion dollars to expand into the online health and travel categories. The firm, 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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