As the year 2023 draws to a close, the layoff saga continues amongst domestic start-ups. In the latest development, homegrown startup and social media platform ShareChat laid off 15% of its workforce on December 20, citing organisational restructure.
The development comes almost a year after the company in January this year, fired 20% of its workforce or 200 employees in order to cut costs. Notably, ShareChat’s parent firm Mohalla Tech also shut down its fantasy gaming company Jeet11 in December last year amidst intense competition.
The total number of laid-off employees could not be ascertained by Fortune India, however, reports suggest that more than 200 employees have been handed over the pink slips.
"ShareChat today undertook a strategic restructuring as part of its annual planning for the year 2024. The decision reflects the company's commitment to streamlining its cost base and achieving profitability within the next 4-6 quarters," the company says in a statement.
"In alignment with our strategic vision, the company undertook a comprehensive restructuring effort to streamline operations, enhance productivity, and position the company for sustainable growth. As a result, the organization has moved to a flatter organisational structure and prioritized product initiatives that resulted in a reduction in team sizes by roughly 15%," it adds.
The Bengaluru-based company, which is backed by Google and Temasek, has also reportedly faced a valuation cut by nearly ₹28,000 crore thus triggering layoffs. The homegrown social media platform has faced a valuation cut from $4.9 billion last year to $1.5 billion this year.
In FY22, Mohalla Tech, which also owns the short video entertainment app Moj, reported a more than two-fold rise in its consolidated net loss to ₹2,988 crore in FY22 as compared to losses worth ₹1,460 crore in FY21.
As funding winter and layoffs continue to haunt Indian startups, a recent report by Tracxn suggests that the domestic startup ecosystem witnessed a significant funding decline of 72% in 2023, compared to $25 billion in the previous year, making it the lowest-funded year in the last five years.
With a total funding of $7 billion received so far this year, India has dropped from 4th place in 2022 and 2021 to 5th place among the highest-funded geographies globally in 2023, the report says. The last quarter recorded the lowest funding of $957 million to date, making it the lowest-funded quarter since Q3 2016.
The decline is primarily due to the biggest drop in late-stage funding, by over 73% to $4.2 billion in 2023 from $15.6 billion in 2022, Tracxn says. The number of over $100 million rounds recorded this year stood at just 17, dropping by 69% compared to last year, as per Tracxn data.
