B2B unicorn Udaan will lay off a chunk of its feet-on-street workers and sales supervisors as the startup looks to overhaul its operations. A person aware of the layoffs told FE that the layoffs will mostly affect contractual workers since their jobs were ‘redundant’ in many geographies where the firm currently operates.
This would be the second round of layoffs at Udaan after it earlier fired around 200 employees in June this year. At that time, the startup said it was reinventing its business model to keep up with changing market conditions. In April 2020, Udaan also let go off around 1,000 workers in the sales and delivery workers’ team due to the impact of the Covid-19 pandemic.
Udaan currently employs over 3,000 workers currently.
“We believe in efficiency as a driver of profitable growth and will continue to refine our cost structures and models…As we move forward in our journey towards making Udaan a profitable company, the efficiency enhancement drive…has created some redundancies in the system, with some roles no longer required. As a responsible organisation, we are working towards providing all requisite support to the impacted employees,” a company spokesperson said.
The second round of layoffs comes despite CEO Vaibhav Gupta saying Udaan’s cash burn had come down by around 40% in the first half of 2022 in an email sent to employees earlier in June 2022. In the same email, he also claimed that the company was on track to become unit economics-positive in the current quarter ended on June 30.
Just last week, Udaan secured fresh funding worth $120 million through a convertible note from existing investors and bondholders. It counts Lightspeed Venture Partners, Tencent, DST Global, GGV Capital, Tor Investment, Arena Investors and M&G Investments as its backers.
With that round, the total funds raised by Udaan through convertible notes and debt in the last four quarters crossed $350 million, including the $200 million secured via convertible notes in January 2022 and a $50-million debt from undisclosed investors in the last quarter of CY21.
Bengaluru-based Udaan was founded in 2016 by former Flipkart executives Amod Malviya, Sujeet Kumar and Vaibhav Gupta. In 2018, Udaan was the fastest startup to earn the coveted unicorn status when it completed its Series C round worth $225 million. It currently sells merchandise to retail and other offline outlets across lifestyle, electronics, home & kitchen, staples, fruits and vegetables, FMCG, pharma, toys and general merchandise.
The IPO-hopeful startup’s decision to sack employees comes at a time when several unicorns have resorted to job cuts to conserve cash in a tough funding environment wherein late-stage deals have declined consistently in the last two quarters.
According to PwC’s Startup Deals Tracker report, growth and late-stage deals volumes declined by a record 75% and 72%, respectively, in Q3CY22 compared with the first quarter of the calendar year (Q1CY22).