Startups continue to lay off in 2023 amid funding winter

“Founders are acutely aware of the slowdown in deal-making, and ‘expanding the runway’ is the mantra they are following to tide the tide over the next quarters. So, startups are on the drawing board to implement those measures. going back which will help them survive for the next 24 months,” said Bhargavi V, cofounder and partner at Java Capital.

Among companies to end layoffs in 2023, Google-backed Mohalla Tech Pvt Ltd, which runs social media site ShareChat and short video platform Moj, topped the list with nearly 600 layoffs. It states that external macro factors affect the cost and availability of capital. The Bengaluru-based company cut its workforce by around 20% in the latest round. Mohalla Tech also laid off its fantasy sports vertical Jeet11, which laid off around 115 employees in December.

Another Google-backed startup that laid off its employees in early 2023 is Dunzo. The instant commerce firm laid off 3% or about 90 employees as part of its restructuring. Product and supply chain employees affected. “Some senior developers and at least two directors of engineering have been dismissed,” said a person with knowledge of Dunzo’s development, who asked not to be named.

Edtech startups continue to lay off in 2023, severely hit by the return to physical classrooms after the pandemic. For example, edtech unicorn Lead School laid off about 60 employees earlier this month after laying off 100 in August, while Upgrad-owned Harappa Education laid off 70 employees. or 35% of its 200-strong workforce. More layoffs are likely at the company, the human resources department told the participating employees. Unacademy-owned Relevel, too, laid off 40 employees, or about 20% of its workforce so far in 2023, as it pivots to a testing product app called NextLevel. , Mass layoffs across sectors followed a blockbuster 2021, when startups collectively raised over $35 billion in venture capital funding. According to data from Venture Intelligence, VC funding is set to decline by 30% to around $24 billion in 2022.

“After an extended period of sunshine, Indian startups face a long, bitter and cold winter in 2022. As soon as the funding crunch begins, startups lay off their runway to survive and grow,” said Bhaskar Majumdar, managing partner, Unicorn India Ventures.

Sequoia-backed Rebel Foods, SoftBank-backed Ola, B Capital-backed e-2wheeler maker Bounce, WestBridge Capital-backed voice automation startup Skit.e, Tiger Global-backed industrial goods marketplace Moglix, and Upscaleo, a TherSio-style venture Is. Finance e-commerce brands also sacked employees in January. Layoffs are likely to continue as VCs believe that companies are staring at tough times. “2023 is more bleak than six months ago. “Winter has really set in,” warns Bhargavi of Java Capital.