SoftBank-backed Indian unicorn Meesho, has laid off 251 employees, or around 15% of its workforce, as the funding slowdown has forced startups to cut back on expenses and re-evaluate their business plans. Meesho is an e-commerce platform that allows individuals and small businesses to sell products online through social media channels like Facebook and WhatsApp.
In a mail to employees on Friday, Meesho’s founder and CEO, Vidit Aatrey, acknowledged that the company had made errors in over-hiring and that it was now necessary to align its people costs with the new projections for its business. “We grew by 10 times from 2020 to 2022, helped by Covid tailwinds and aggressive investments. Even as we tracked to our plans, the macro climate undeniably and considerably changed. As a result, we have had to accelerate our timeline to profitability, while readjusting our GMV (gross merchandise value) growth goals to 30% y-o-y,” Aatrey said.
Meesho is not alone in making cuts due to the funding slowdown. Many other Indian startups have been forced to do the same, and some have even had to shut down operations altogether. The funding slowdown is a reflection of the current state of the Indian startup ecosystem, which is undergoing a correction as investors become more cautious and demand higher levels of profitability.
Despite the challenges, there are still reasons to be optimistic about the future of the Indian startup ecosystem. India is home to a large and growing pool of talent, as well as a growing number of successful startups that have already achieved profitability. As the market continues to mature, it is likely that more startups will be able to succeed and thrive, even in the face of funding challenges.
Meesho’s layoffs come after the company laid off around 150 employees last year as it revamped its grocery business Superstore. The company has raised over $1.3 billion in funding so far, with its most recent funding round in October 2021 valuing the company at $4.9 billion.
Meesho’s platform allows anyone to start a business by selling products to their friends and family on social media. The company provides a range of services to its sellers, including sourcing products, logistics, and payment processing. Meesho’s business model has proven popular in India, where many people are looking for ways to supplement their income.
The Indian e-commerce market is one of the fastest-growing in the world, and Meesho is well positioned to take advantage of this growth. However, the funding slowdown has forced the company to make some difficult decisions in order to ensure its long-term viability. Meesho’s layoffs are a reminder that even successful startups are not immune to the challenges of the market.
To address these concerns, Meesho has said that it will provide affected employees with a comprehensive severance package, including extended healthcare benefits, outplacement support, and financial assistance. The company has also said that it will work to help employees find new jobs within its network of partners and customers.
It is encouraging to see that Meesho is taking these steps to support its employees during this difficult time. As one of the leading startups in India, the company has an important role to play in setting the standard for how startups should treat their employees during times of transition and change.
Looking ahead, it is clear that the Indian startup ecosystem will continue to face challenges in the coming years. However, by remaining focused on building sustainable businesses that can achieve profitability, startups can weather these challenges and emerge stronger in the long run.
As the economy continues to recover from the pandemic, it is likely that funding will become more readily available for startups once again. When this happens, companies like Meesho will be well positioned to take advantage of new opportunities and continue growing their businesses.
