This Fintech Startup Suddenly Fires 35% Employees: Big Change In Business Model?
A startup called OkCredit has sacked 40-45 employees across all functions including collections and technology testing.
It provides bookkeeping and e-commerce enablement services for small and medium size businesses.
The move comes as it shifts its focus from bookkeeping and e-commerce enablement to fintech initiatives.
It hasn’t had much luck in the kirana-led commerce opportunity which relates to e-commerce enablement and other products.
The market is also very competitive with large well-funded players including Udaan competing in the space, B Capital-backed Khatabook, Vypaar and a few others.
But for OkCredit funding opportunities are also drying up, thus its decision to reduce burn and pivot.
It was backed by the likes of Tiger Global and Lightspeed India Partners and has raised a little more than $82.5 million in total since inception in 2017.
It had last raised a $67 million Series B round in September 2019.
In stark contrast, archrival Khatabook has raised over $185 million since inception in 2018.
Severance And Outplacement Offered
This is the first time that the firm is laying off part of its workforce.
The affected people have been given standard severance pay and other benefits including insurance and outplacement services.
Third Of Workforce Out
It used to have a headcount of over 140 people which has now reduced to about 80- meaning that the startup has fired between 30 to 35% of its total workforce.
Most of those impacted were from growth and payments departments.
The company didn’t comment on how many it fired but did confirm the change in priorities.
A spokesperson said that it will now be involved in fintech and focusing on strengthening its growth channels alongside digital in its mission to help Small and Medium Businesses grow their business in India.
Keeping this in mind, it will hire talent with the relevant skill sets.
This change in priorities necessitated an assessment of the roles of its employees and decided to undertake restructuring in which they were laid off.
Downloads, Revenue Stagnant
This shift in focus is not a surprise looking at the downloads numbers of its core bookkeeping application and revenue figures.
Download growth has been flat in the past six months.
It has 40 million lifetime downloads with only 1.2 million coming in the past three months.
During the fiscal year ending March 2021 the startup remained pre-revenue, having made just Rs 3.80 lakh in operating income with a loss of Rs 109 crore.