B2B startup Udaan lays off 180 employees

Tencent-backed Udaan has laid off 180 employees in a move to “reinvent its business model and keep up with changing market conditions”, a source told FE.

The business-to-business (B2B) trade platform sacked staff across teams such as sales and on-field executives. It, however, said it was extending medical insurance and other benefits to the employees impacted.

“Udaan has laid off about 160-180 employees as it looks to reinvent its business model and focus on the more profitable divisions. The company probably also took the decision owing to market conditions where businesses are struggling to generate profits by reducing their cash burn,” the source said.

The IPO-hopeful startup’s decision to sack employees 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 this month.

In the same email, he also claimed that the company was on track to become unit economics-positive in the current quarter ending on June 30.

Just six months ago, Udaan had raised $250 million — majorly through convertible notes — and $50 million through debt. It now counts Lightspeed Venture Partners, Tencent, DST Global, GGV Capital, Tor Investment, Arena Investors and M&G Investments as its backers.

The company was valued at over $3 billion when it last raised capital in January 2021.

Confirming the development to FE, an Udaan spokesperson said, “We believe in efficiency as a driver of profitable growth and have already made significant progress towards building a sustainable business. As the market evolves, we continue to tweak our already proven business model to make it stronger, more efficient, customer-centric and agile. In this direction, we have taken various steps to enhance efficiency, refine our cost structure and grow faster in our journey to achieve strong unit economics. However, the efficiency enhancement exercise has also resulted in certain redundancies in the system, with some roles no longer required. On the other hand, as part of the long-term plans of the organisation, we continue to hire talent for the new roles that have been created to grow the business faster.”

“As a responsible organisation, we are working towards providing all requisite support to the impacted employees, which include medical insurance for self and family (based on the existing coverage plan), compensation package as per company policy and providing placements assistance. We remain committed to our goal of driving kirana commerce and empowering small & medium businesses of Bharat by leveraging the power of e-commerce,” the spokesperson added.

With this decision, Udaan joins a growing list of startups that have fired thousands of employees as they look to grow in a more sustainable way, while returning profits to their investors.

New-age companies such as Citymall, Unacademy, Meesho, Vedantu, Cars24, MFine, Mobile Premier League (MPL), FrontRow, Lido Learning, OkCredit, Trell, Furlenco and Udayy have all fired over 9,000 employees in total so far in 2022.

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