In hunt for profits, well-funded start-ups downsize 

Yatti Soni | | Updated on: Apr 09, 2022

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Layoffs at Meesho, Unacademy, Trell signal growth pangs, business plan re-think

Yatti Soni

Bengaluru, April 8

Last year, social commerce start -p Meesho raised close to $900 million over three rounds. This year, the Meta-backed unicorn is reportedly laying off people. Has the bubble burst?

In a LinkedIn post, an account (Aishwarya Garg’s) claiming to be the City Manager at Meesho, said that the company is downsizing its grocery vertical Farmiso (rebranded to Meesho Superstore). She claimed that many employees had been pressured to voluntarily resign from the vertical, even as the company continues to hire for other segments.

Comments on the posts supported the City Manager’s narrative, with one former employee claiming that he was asked to leave abruptly within four months of joining.

Garg’s LinkedIn post was, however, deleted by the evening of April 8. Meesho did not respond to BusinesslIne’s queries, till the time of going to press.

Earlier this week, Meesho announced integrating its grocery business within the core application by the first week of May, 2022. The company has also rebranded Farmiso to Meesho Superstore.

Spate of layoffs

Meesho is not the only company downsizing. On Monday, Unacademy confirmed laying off about 600 employees and contractual workers from its core test-prep business. The edtech major said it aims to become profitable in the core business by the end of Q4 of calendar 2022 and layoffs were made due to role redundancies and performance.

Besides Unacademy and Meesho, social commerce company Trell also said that it is “rightsizing” its team as its board decided to focus on a few core initiatives and strengthen its systems/processes before it raises the next round of funding.

Edtech start-up Lido Learning has also downsized its team to 300 employees, as compared to its 1,000-member team in March 2021. Sources told BusinessLine that Lido Learning is facing financial troubles and may get acquired soon.

Growth pangs

Commenting on the layoffs in multiple start-ups, Nandini Mansinghka, CEO and Co-Founder of Mumbai Angels, told BusinessLine, “When you do venture building at a fast pace, there will be business models, which at some point feel like they need a lot of people. And then the business model pivots, leading to layoffs. ”

Both edtech and social commerce were among the high growth segments during the Covid, pandemic. As the euphoria in the ecosystem wanes, start-ups seem to be re-aligning business focus.

Published on April 08, 2022
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