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Indian startups CityMall, Unacademy slash hundreds of jobs

Tech companies face mounting pressure to cut costs amid volatile markets

Indian social commerce startup CityMall laid off around 191 employees last week, while education tech company Unacademy has asked 150 more staff to leave after firing 800 in April. (Source images from City Mall Facebook page and Unacademy Facebook page)

NEW DELHI -- Indian startups have laid off close to 10,000 employees in just six months through 2022, and it looks like there won't be any respite in the near future.

Just three months after raising funds, social commerce startup CityMall laid off around 191 employees last week, while education tech startup Unacademy has asked 150 more staff to leave after firing 800 in April.

A Unacademy spokesperson said the latest departures were not layoffs, but were due to "a performance improvement program."

A CityMall spokesperson said: "Certain roles within the company had to be dissolved to align to our evolving business model and the current business environment."

While the COVID-19 pandemic came as a shot in the arm for the tech industry, leading to many funding rounds by startups, the sector 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.

CityMall had raised $75 million in a Series C funding round led by Norwest Venture Partners in March, valuing the General Catalyst Partners-backed company at over $350 million.

Unacademy is currently valued at $3.44 billion and counts global venture capital firms such as Sequoia Capital, Tiger Global Management and SoftBank among its backers.

According to Fintrackr data, CityMall has raised close to $115 million to date from investors including Jungle Ventures, Elevation Capital, AM Holding, General Catalyst, WaterBridge Ventures and Accel, and was valued at about $320 million during its Series C round. The company deals in lifestyle, grocery and other categories through a network of community resellers in tier II and III cities.

For Unacademy, which is one of the most well-funded edtech startups, the goal is profitability. In an email to his employees last month, co-founder and CEO Gaurav Munjal had asked staff to work under constraints and focus on profitability at all costs. "We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months," Munjal wrote in the email.

"We must survive the winter. We have a different iconic goal this time. The goal is profitability. The goal is of generating FCF," he added, referring to free cash flow.

For the original story from DealStreetAsia, click here.

DealStreetAsia is a financial news site based in Singapore that focuses on private equity, venture capital and corporate investment activity in Asia, especially Southeast Asia, India and greater China. Nikkei owns a majority stake in the company.

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