The fintech space has witnessed the effects of the start-up financing freeze, after Rupeek, which is a gold loan platform, has announced the layoffs of its workers by about 10-15%. Rupeek is the first fintech company to dismiss its employees amid harsh financial conditions. The company has dismissed over 180 employees of a total of 1,200 people team.
The founder and CEO of the company, Sumit Maniar informed the employees about the decision through an e-mail that was sent to all the employees. The company has mentioned in their statement that they are deeply regretted having taken this extremely difficult decision to part ways with the 10-15 per cent of their staff. The subdued environment of financial scarcity has forced the company to re-evaluate its strategy, check the costs of the company and reframe the structure with some required enhancements in order to support the nutrition and growth of the company. It also said that all the efforts and contributions made by all the employees who are being affected by the decision, are highly appreciated and the company will keep supporting all of them through this alteration.
Rupeek has announced the layoffs of its workers by about 10-15%.
Reportedly, the mail sent read that the company conducted an exercise after which, it has decided to keep the workforce that is the right fit for the future endeavours of the company and have decided to amend the strategic plans. The organisation, as said had to go through a lot of difficulties while making the decision. The CEO of the company has added to this that in the last two quarters, Rupeek has seen significant growth of 2x and currently, the business model of the company is suitable to keep the growth placed at a healthy speed.
At the beginning of this year, Rupeek had raised funding of $34 million from Lightbox and other existing investors of the company. At that duration, Rupeek mentioned that the gold loan expense of the company had doubled in December 2021 in comparison to 2020. The annual expense run rate of the company was recorded to be around $1 billion by the end of 2021. The company has claimed to be the first capitalised lending company which has reached this far in the fintech industry.
Rupeek has seen significant growth of 2x and currently, the business model of the company is suitable to keep the growth placed at a healthy speed.
This layoff move by Rupeek comes after the widespread layoffs by other start-ups, mainly ed-techs. Unacademy, Eruditus, Vedantu, Lido, Cars24, Mfine and many others have dismissed over 6,000 employees. With an increasing focus on unit economics and VCs being more cautious in their investments, start-ups looking to raise financing riding the wave of 2021 are finding it difficult to obtain high valuations. The fears of Ukraine-Russia got many investors lost in the crash of the stock market. The funding slowdown is expected to last for another two years maximum and thus, the companies are now focussing more on the profitability and stronger economy than on the expansion or growth of the company, so they can prepare for the runway.
Last month, for instance, the founder of Unacademy, Gaurav Munjal sent a letter to his employees which stated that the company should focus more on profitability than any other aspects. Capital organisations like Beenext, Sequoia Capital and many others have advised their founders to cut the extra company costs and expand the economic units of the company.