Crisis-hit Vedantu lays off staff as funds dry up
Edtech unicorn earlier sacked 200 employees, now laying off 424 more Vedans as external environment getting tough for it
image for illustrative purpose
Facing Rough Weather
- Global inflationary environment led to less flow of funds
- New age cos facing liquidity crunch
- Most startups not profitable yet
- India home to 100 unicorns
- Only 23 unicorns are profitable so far
- Many listed and unlisted entities witnessing drop in valuation
- This forces them to raise fund at a lower valuation
War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters," company's CEP & Founder, Vamsi Krishna wrote in the blogpost
Bengaluru: Laying off employees continues as edtech unicorn Vedantu onWednesday said in a blog post that the company would be laying off 424 employeesas external environment for startups gets tough.
The employees parting the company constituteseven per cent of its 5,900 strongworkforce, the company added.
This is the second round of such involuntary separation that the unicorn has takenup after it laid off 200 employees earlier comprising both contractual and full-timeemployees.
"Currently, the external environment is tough. War in Europe, impending recessionfears, and Fed rate interest hikes have led to inflationary pressures with massivecorrection in stocks globally and in India as well. Given this environment, capital willbe scarce for upcoming quarters," company's CEP & Founder, Vamsi Krishna wrotein the blogpost.
"With Covid tailwinds receding, schools and offline models openingup, the hyper-growth of 9X, Vedantu experienced during the last two years will alsoget moderated. For long-term sustenance of the mission, we would need to adapttoo," he added.
The founder said that after comprehensive evaluation of current operations andfuture prospects, the company has come to the conclusion that some projects needto be deprioritised.
"A few teams and projects will have to be deprioritized and in the process, a few ofour Vedans (employees) will be let go as well," the blogpost said.
Krishna, however, noted that this layoff was a one-time activity with no further cyclesand the company would focus on growth and efficiency from now on.Many startups have started firing their employees as the fund raising environmentdeteriorates in the country.
While Unacademy has fired around 1,000 staffers, Trell has laid off about 300employees in the recent past. Ecommerce startupMeesho has fired about 150staffers in recent months apart from some other startups.
Indian startup ecosystem is staring at a funding dearth as global inflationaryenvironment has led to less flow of funds into new age companies. Also, moststartups are not profitable yet which force them to let go of employees in case offunding scarcity.
India is now home to 100 unicorns out of which 23 are profitable so far. Many listedand unlisted entities are also witnessing drop in valuation owing to fund raising at alower valuation than earlier rounds. Paytm Mall has fallen from unicorn club as itsvaluation has plunged to a meagre $13 million from its prime valuation of $3 billionas its key backers Alibaba Group and Ant Financials exited the company on loss.
Stock prices of most listed new age companies have corrected sharply in recentmonths owing to overall correction of the Indian market.
