Start-ups have been facing a tough time since the last quarter of 2022 with funds drying up following monetary policy tightening by global central banks and correction in equity markets. In a bid to please their investors, many start-ups had to downsize, reducing their staff strength. The number of start-up employees laid-off has surged in 2022-23.
Since April 1, , 43,399 start-up employees have been laid off across the world. Of these, over 13 per cent were fired by Indian start-ups.
According to the data compiled by layoffs.fyi, a tracker that compiles public information about layoffs in start-ups across the world, between April 1 and July 12, 2022, 26 start-up events happened in India, causing 5,670 people to lose their jobs. To put this in context, in the whole FY22, the number of start-up employees laid off in India were 1,440.
Globally, 342 companies laid off their employees since April 1 and 43,399 people were shown the door. In the US alone, 21,329 start-up employees were let go off.
Most start-up layoffs in this financial year in India occurred in June; 17 of them. Data say that at least 2,261 people lost their start-up jobs in this period. In May, seven layoff events occurred in India across six companies. However, 2,109 people lost their jobs then. In April, two start-ups cumulatively fired 1,150 people.
Big fires
With big players like Unacademy, BYJU’S s and Vedantu laying off a large number of people, the ed-tech sector saw the greatest number of firings in the first quarter of the fiscal. The tracker says that Unacademy fired 1,150 people in two phases, Vedantu fired 624 and BYJU’S -owned Toppr and Whitehat Jr fired 350 and 300 people each.
Healthcare start-up sector saw the second most number of people losing jobs. 940 people were laid off in the first quarter of FY23, with Bengaluru-based MFine alone firing 600 people. Pre-owned cars e-commerce platform Cars24 too fired 600 people in May.
Back to 2020?
Since the outbreak of the pandemic, 23,681 start-up employees lost their jobs. As many as 12,951 people lost their jobs in 2020 alone. While things got much better in 2021, 2022 has no dearth of bad news. Are we heading towards a firing spree similar to 2020?
Sajith Pai, Director of tech fund Blume Ventures, does not think so.
“As the funding environment gets cautious, we are seeing greater focus on costs and extending runway at start-ups. A lot of the larger start-ups are rethinking projects outside of their core and are becoming cautious on expansion of teams,” he says.
The funding scene also looks bleak at the moment. While 292 venture capitalist deals happened in India in the first quarter of the financial year, the cumulative value of those deals was $7 billion, the lowest since the last quarter of FY21. This is according to the data compiled by research film Venture Intelligence.
“Sectors that rely heavily on external and institutional capital for their operations may be the hardest hit,” says Ashish Bhatia, Co-founder of India Accelerator, adding that one could expect more bad news in the coming months. “The larger job market in India remains buoyant across sectors so things won’t be as bad as 2020,” he says.