According to Flipkart’s CEO, Indian businesses must prepare for a long funding winter
- ByStartupStory | November 22, 2022
Flipkart CEO Kalyan Krishnamurthy cautioned that the startup ecosystem’s funding winter might extend another 12 to 18 months and that the sector may experience “a lot of turmoil and volatility.”
“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,” At an Economic Times-sponsored event, Krishnamurthy spoke.
According to Krishnamurthy, startup owners should embrace a downturn and restructure their businesses.
“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.
Only two Indian startups—Shiprocket and OneCard—attained unicorn status (valuations of $1 billion and above) between July and September, according to a PwC India report released last month.
With start-up funding in India in Q3 reaching a two-year low of $2.7 billion across 205 deals, the global funding slowdown is still there.
“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 Partner-Deals and India Startups Leader at PwC India, Amit Nawka.
More than 44 startups have so far laid off nearly 16,000 workers, with edtech firms like BYJU’s, Unacademy, Vedantu, and others leading the way. This is due to the startup funding winter.
Since the beginning of 2022, funding for Indian startups has been steadily declining.
Indian entrepreneurs only raised $1.3 billion in October, a substantial gain over September but a far cry from October 2021 after raising $4.6 billion in January.
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