WhiteHatJr, owned by the Indian decacorn BYJU’s, has handed the pink slip to around 300 employees globally, a source close to the company told DealStreetAsia.
Separately, Udaan, a B2B marketplace, has fired 180 employees, joining the bandwagon of Indian startups resorting to layoffs to cut costs amid tough market conditions.
For the four-year-old coding-for-kids startup WhiteHatJr, the layoff comes around a month after many employees resigned from the company. A source close to the company said this number was around 200-250.
A WhiteHatJr spokesperson confirmed the layoffs to DealStreetAsia: “To realign with our business priorities, we are optimising our team to accelerate results and best position the business for long-term growth.”
According to a report by The Ken in May, WhiteHat Jr is close to shutting down its mathematics division, which launched only in January 2021. BYJU’S had acquired the coding-for-kids startup in early 2020 for an exorbitant $300 million —almost 3X its revenue — but it was able to raise quick rounds on the back of this investment and increase its valuation from $12 billion to over $21 billion, the report added.
When asked whether there will be more layoffs at WhiteHatJr, the source said, “It is unpredictable.”
The layoffs also come at a time when its parent company BYJU’S has been reportedly accused of not making payments to the promoters and private equity firm Blackstone Group for its acquisition of Aakash Educational Services Ltd (AESL) last year for about $1 billion. AESL and Blackstone are planning to serve BYJU’s notice for non-payment, said a recent report in The Morning Context.
Responding to their email, however, BYJU’S has strongly rejected the insinuations. The company stated that the acquisition of Aakash is fully on track and all payments are expected to be completed by the agreed-upon date i.e. August 2022.
“The group might fall like a pack of cards if investors don’t step in and take some hard decisions,” Atul Thakkar, director at Anand Rathi Investment Banking told DealStreetAsia.
“BYJU’S might fall like a pack of cards if investors don’t step in and take some hard decisions.” — Atul Thakkar, director, Anand Rathi Investment Banking
While the pandemic came as a shot in the arm for the tech industry, leading to many funding rounds by startups, it is now feeling the pressure in a volatile market led by inflation, the Russia-Ukraine war and stock market crashes.
Media reports suggest that investors are advising startups to cut costs and increase the runway by as much as three years, with several funding rounds being renegotiated, stalled or canned. A clutch of well-funded companies, including Cars24, Meesho, MFine, Trell and Vedantu, have recently laid-off employees to cut costs.
Udaan’s layoffs come just a few days after CEO Vaibhav Gupta reportedly told employees in an email that the company slashed its cash burn by more than 40% in the first half of 2022 and that it has improved its unit economics by more than 1000 basis points (bps) over the last year.
Founded in 2016 by Flipkart alumni Gupta, Sujeet Kumar and Amod Malviya, Udaan is an e-commerce platform designed to connect small and medium-sized businesses with manufacturers, wholesalers and retailers to sell goods. It competes with the likes of IndiaMART, Flipkart Wholesale, among others.
It is one of the most well-funded companies among Indian startups in the past few years. According to Fintrackr, it has raised around $1.3 billion and was valued at $3 billion as of January 2021.
Earlier this year, the LightSpeed-backed Udaan raised a total of $250 million through convertible notes and debt funding, which saw Microsoft joining as an investor.