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FutureStarrStartups Facing Pressure to Cut Costs as Global Economy Slows Down
India-based tech startups are struggling to raise capital as the global economy slows down. These businesses must reduce expenses and turn profitable quickly in order to remain viable.
According to The Hindu, Indian tech services companies may need to cut between 80,000 and 120,000 jobs over the course of two quarters.
Started in 2018 by Karan Bajaj, WhiteHat Jr is one of India's fastest-growing startups that teaches coding to children between 6 and 14 through one-on-one online sessions. Their course curriculum provides a comprehensive and understandable introduction to programming concepts for children from various backgrounds.
The company is targeting a demographic of families with an annual disposable income of INR 10 lakh who are willing to invest in their child's education. Furthermore, these individuals lead an innovative lifestyle, are tech-savvy and comfortable using gadgets and Wi-Fi networks.
As our world becomes more technologically advanced, the need to educate young people becomes even more critical. That is why more schools are including coding into their curriculums.
With this in mind, WhiteHat Jr, which was acquired by Byju's two years ago for $300 million, seeks to introduce coding into schools around the globe. By doing so, it hopes to make learning programming principles such as sequence, structure, logic, commands and algorithmic thinking simpler for students.
However, the startup's losses are mounting and expenses are spiraling out of control. According to an Economic Times report, Byju's, which owns a 45% stake in WhiteHat Jr, has had to cut 300 employees from its workforce.
India's edtech sector is facing restructuring, and Byju's has been considering whether to close down their acquisition of WhiteHat Jr. The edtech firm reported a loss of Rs 1,690 crore for 2021 while expenses totalled an eye-watering Rs 2,175 crore.
As part of its cost-cutting efforts, Byju's has been considering shutting down WhiteHat Jr for months. This decision has become necessary due to rising expenses as the business has expanded overseas.
Ola, which has become a unicorn startup, is renowned for its daring product innovation. It revolutionized taxi rental fleet services and expanded ride-hailing's boundaries. Furthermore, Ola Dash and Ola Store offer quick-commerce options.
Sources noted that the company had been considering shrinking its workforce by around 200 people across teams since last September; however, the latest round of layoffs came as a complete shock.
It plans to intensify its engineering verticals and enhance capabilities across vehicle, cell, battery, manufacturing and autonomous streams while shuttering its neo-banking platform Avail Finance.
On the other hand, Ola's electric vehicle business has generated great excitement as it plans to open India's largest EV factory. This mega-factory will feature over 3,000 robots powered by AI and using Industry 4.0 principles.
Ola has several exciting projects underway, in addition to its futuristic electric vehicle factory. For instance, it has collaborated with Swedish automation giant ABB on robotics and automation solutions for key processes at its mega factory.
Ola recently acquired GeoSpoc, a cutting-edge location technology, to expand its geospatial services. Through this partnership, Ola hopes to assist cities with their planning and infrastructure needs.
It offers a diverse portfolio of products such as kick scooters, e-bikes, drones and flying cars that can be integrated with its existing services to meet the ever-changing needs of consumers. Ultimately, the company strives to become an influential sustainable mobility provider by rolling out an electric vehicle range in 30 Indian cities. Made from high quality materials, its e-scooter range is expected to cost up to 80% less to run than an internal combustion engine.
Fraazo is an online daily fruits and vegetables shopping platform that delivers farm-fresh produce to Mumbai within an hour. Through their app and network of micro-fulfillment stores, Fraazo sells close to 2,000 tonnes of fresh produce annually.
This startup is supported by investors such as Nabard-backed Nabventures Ventures, Equanimity Ventures and Apar Group. According to its filing with the ministry of corporate affairs in India, its latest funding round consists of both equity and debt.
Atul Kumar, co-founder and CEO of Fraazo, describes their startup's unique backend supply chain that encompasses over one million farmers. Furthermore, they are a leader in digital grocery delivery; their user-friendly checkout interface makes ordering produce simple with just a few clicks.
Fraazo has launched a series of videos to demonstrate the earnestness with which it delivers its products. The clip shows farmers reaping their crops with tenderness and gratitude before being collected by delivery riders. The rider describes his work with enthusiasm, guaranteeing that products arrive as fresh as when they were picked from farms.
Meanwhile, the company has also introduced an 'Express Delivery Service' to guarantee customers receive their items without any hassles. It currently serves 60+ societies within Mumbai's lockdown, and plans on expanding this service to 100+ communities soon.
As more Indian startups experience funding shortages, many are making tough decisions to reduce their staffs and cut expenses. A recent VCCircle analysis revealed that multiple venture capital-backed startups have cut over 10,000 employees since the start of this year.
Vedantu is an educational technology company headquartered in Bengaluru, India. It offers an online platform with real-time personalized learning to make education accessible to everyone by injecting fun and enjoyment into learning.
Vedantu was established in 2011 by four friends from Indian Institute of Technology. Vamsi Krishna, Saurabh Saxena, Pulkit Jain and Anand Prakash have all mentored thousands of students while training over 200 teachers through Lakshya - their educational venture which they co-founded in 2006.
Vedantu was founded with the idea that every learner has a unique learning style. They advocate for personalized and democratic education systems.
Their platform utilizes an innovative feature called 'Hotspot' that makes the teaching screen clickable so students can provide feedback or responses. This enables teachers to adjust their teaching accordingly and make it more effective.
The team also utilizes WAVE Technology, which enables teachers to have live classes with multiple students simultaneously. This promotes better learning outcomes and ensures no students are left behind.
This edtech company is one of the few in India to offer offline teaching through their own centres. In October, it acquired test preparation firm Deeksha for $40 million.
With over 1 million lifetime learners, this company plans to double its growth exponentially. Backed by Accel Partners, Tiger Global, and Coatue Management, it has an ambitious growth plan.
Vedantu has been in the spotlight recently due to its recent round of layoffs and IPO plans. So far, they've let go over 1,000 employees and offered them a salary for two months as severance payment as well as extended health insurance benefits until March 2023.
Established in 2015, Unacademy is one of India's largest online learning platforms. It provides over 2,400 video courses and lessons on various topics like test preparation, academic subjects, language learning, and more - all accessible on both Android and iOS devices.
The company boasts an expansive network of educators and learners across India. Its YouTube channel boasts over 315 million views, while the app serves as a hub for thousands of educators to offer courses in various fields.
Munjal is a product-obsessed entrepreneur who values his ability to craft an excellent product as the most important business strategy. His obsession can be seen in his acquisition strategy, where he often targets companies he believes can be transformed into competitors or used for building his own empire.
He also plans to build a platform like Netflix that allows him to create content that can be consumed by millions of users. While this idea is not new in the startup world, it represents an ambitious vision for an Indian company with no formal business or product management training.
As a result, it has had difficulty raising funding as India's edtech ecosystem struggles to recover from an economic slowdown that hit the sector hard. According to Reuters in February, many Indian startups had laid off tens of thousands of employees and were having trouble raising capital as the country's economic growth stagnated.
Due to this, the startup's headcount is now just under 3,000. A recent internal email seen by Reuters indicates that 12 per cent of its workforce have been let go as it strives to become profitable and remain competitive.