Big valuation reset coming for Indian startups next year: Flipkart’s Kalyan Krishnamurthy

“It is going to be tough next year. I think a lot of people will hit the market (for fundraising) between April and June next year. That’s probably the moment of truth for all of us in the ecosystem,” Krishnamurthy said during a panel discussion on ‘The Great Reset: tracking the profitability versus growth conundrum amidst the tech winter.’

“We anticipated [the downturn]. In 2021, companies saw a spike in valuation of two times to six times with some underlying assumptions for the next two to three years. I think very quickly it was clear that those assumptions are not going to play out, whether it is on growth or profitability,” Krishnamurthy said.

His comments come at a time when venture funding has been hit hard across stages in India and around the world. According to Venture Intelligence, startups saw funding of $2.7 billion in the September quarter as against close to $12 billion in the same period last year. There were only four $100 million-plus deals compared to 17 in the June quarter and 30 in the March quarter.
A host of startups, especially in the edtech sector, have had to fire a significant portion of their staff to cut costs and extend their runways.

Walmart-owned Flipkart raised $3.6 billion last year, after which it was valued at $37.6 billion.

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Flipkart’s marketplace arm, Flipkart Internet, posted a 33% rise in operating revenue in fiscal 2022, but its loss for the year widened one-and-a-half times as it spent more on delivering orders, advertisements and promotions. Its net loss was Rs 4,361 crore on an operating revenue of Rs 10,476 crore in FY22.