June 2022 \ Business & Investment \ BUSINESS NEWS—STARTUPS
Layoffs despite startups being flush with funds

After funding galore that saw more than $42 billion flowing in the Indian startup ecosystem last year alone, the current layoff season has shaken up the country’s workforce, especially the young, who quit traditional, stable companies to join startups at crazy packages

By Nishant Arora

Several sales executives have also quit BYJU’s after they were asked by the HR team to join various locations on meagre salaries. Edtech platform Unacademy first laid off nearly 600 employees, contractual workers and educators—about 10 percent of its 6,000-strong workforce across the group—in April. Unacademy’s co-founder and CEO Gaurav Munjal has predicted a funding winter that can last as long as 18 months, saying it will cut costs wherever required to weather the dry spell and become profitable.

In a letter to employees, Munjal said that “we must learn to work under constraints and focus on profitability at all costs”. “Some people are predicting that this (funding winter) might last 24 months. We must adapt. This is a test for all of us. We must learn to work under constraints. We must focus on profitability at all costs. We must survive the winter,” he wrote. Another online learning company Vedantu has fired more than 424 workers owing to “financial constraints”.

According to Vamsi Krishna, CEO and co-founder of Vedantu, the external environment is tough as the Russia-Ukraine war, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India.

“There is no easy way to say this but I am truly sorry. Out of 5,900 Vedans (employees), 424 of our fellow teammates, i.e. about 7 percent of our company, will be parting with us,” Krishna said in May. Healthtech platform mFine has laid off over 50 per cent of its total workforce (more than 500 employees) from operations, product and marketing verticals, according to sources. Shripati Acharya, managing partner, Prime Venture Partners, told IANS that they are in unprecedented times and the steep change in macro-conditions is particularly difficult on companies who are in active fundraise right now.

Prime Venture Partners is one of its existing investors in mFine. “Unfortunately, restructuring and layoffs are inevitable in such scenarios and are very hard decisions for entrepreneurs to make. MFine has built a great product which is being used by millions of people and has built a huge hospital network with esteemed doctors,” Acharya said. Pre-owned e-commerce platform CARS24 has asked around 600 employees to go on the basis of “poor performance”. “This is business as usual as these are performance-linked exits that happen every year,” the company said in a statement shared with IANS. The platform was last valued at $3.3 billion, about double the valuation from its previous round in September 2021.

Tags: Zomato, Startups, BYJU

Related News.