With B2B e-commerce platform, Udaan sacking around 120 employees two days back – 8% of its total staff strength – as part of its business restructuring process, layoffs in the startup world continues unabated.
According to data sourced from layoffs.fyi, so far in the current calendar year, 108 startups have laid off 15,098 employees. This is higher than 59 companies sacking 14,224 employees in 2022, which included mass layoffs at Byju’s, Ola and Unacademy.
Things have been no different at Byju’s since then. It laid off another 2,500 employees in two rounds this year, followed by Sharechat that fired 500 employees in January. Besides these, unicorns such as Swiggy fired 380 employees and Pristyn Care fired 300 employees this year.
Startups that have laid off upwards of 300 employees this year includes vernacular learning platform Adda247, used car marketplace Spinny, Milkbasket, ed-tech firm Skill Lync, 1K Kirana, and struggling quick commerce company Dunzo.
The slowdown in funding that began last year has forced startups to focus on efficiency and profitability, compelling some of them to shift gears from a high-cash-burn-led growth to a more sustainable pace of scaling the business.
Layoffs were undertaken as a part of cost-saving measures and often by companies that had hired at a large scale prior to the funding winter, encouraged by the funding boom of 2021 when the industry saw a year of easy capital and sky-high valuations.
The Covid year of 2021 also recorded significantly fewer layoffs by companies. As per layoffs.fyi, five companies had laid off 4,080 employees that year, led by WhiteHat Jr that had fired 1,800 employees that year.
Meanwhile, investors have also taken a second look at the valuations of some of these startups. For example, last month global investment giant Prosus slashed Byju’s valuation to under $3 billion, marking an 86% decline from the earlier valuation of $22 billion, noting that the company is faced with multiple challenges.
If one takes up the case of the latest lay-offs at Udaan, company sources said that it is because of merger of essential and discretionary businesses to optimise operations. Sources said that the company is on its path to turn profitable and ready to list in the public markets in the next 12-18 months.
The funding winter which started last year continues, signalling harsher times ahead for startups. Funding in Indian tech startups hit the lowest in five years this, as per Tracxn data.
Tech startups in India raised a total of $7 billion so far in 2023, which is 72% lower compared to the $25 billion they had raised during the same period last year. As for the ongoing fourth quarter, funding has reached $957 million till date, making it the lowest funded quarter since Q3 of 2016.
This year saw only 1,000 funding rounds across stages, compared to the 2,763 funding rounds last year, which had seen the lingering highs of the 2021 funding boom.
Only two companies entered the unicorn club this year – Zepto and Incred – which is sharply lower than the 23 unicorns added last year, the data showed.