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Time for new breed of Startups?
Kishore Nair .

Saw on LinkedIn:

Ola lays off 1400 employees, Swiggy laid off 1100 employees, Zomato had earlier laid off 500 employees, all in the last one week.

Zomato employees have taken a pay cut of upto 50%

Ola had a 95% decline in revenues. Zomato's & Swiggy's business dropped by 70%.

In the food space 25-40% of the restaurants may shut in the next one year. 7 million jobs will be on the line because of the restaurants closing down.

Oyo has laid off 2400 in India, 5000 in usa, 7000 in China & now plans to layoff in UK. Paytm has laid off 500 employees

All the 5 unicorn startups are loss making:

Ola: 339 million usd loss
Swiggy: 315 million usd loss
Zomato: 294 million usd loss
Oyo: 335 million usd loss
Paytm: 549 million usd loss

Soft Bank which funds Ola, Paytm, Oyo, Delhivery, Policy Bazaar, Grofers has posted a loss of 17.7 billion usd for its vision fund. About 15 of the fund’s startups will likely go bankrupt. This is the worst year in the 39 year history of Soft Bank which has funded Wework & Uber as well. Jack Ma, founder of Alibaba has decided to leave the board of Soft Bank

Is the game of valuations over?
Time for a new breed of startups?

P.S: Delhivery, Policy Bazaar, Grofers posted a loss of 236, 29, 60 million usd

Originally Posted Here
15 Comments

Abhishek Avikk Gupta 

Source??

Kishore Nair

https://www.businesstoday.in/.../oyo.../story/397457.html

Srinivas Renikindi

is is pre corona lockdown. Things might be worse now

Kishore Nair

things are bad for all these firms. But their valuations on papers are booming.

Srinivas Renikindi

how ?

Kishore Nair

I meant they're all still valued at billions; may see a fall, but still..

Vishnu Saran

Read the book, Moonshot dream by Rahul Chandra. Great book if you want to understand the lives of VCs. Valuations usually are on point with market standards. The times that they're not it's because of investors.

Shitij Malhotra

Losses are part of the game, hiring and firing is uncool, you have responsibility
It s not that if they doubled their valuation because of a boom that these employees would be paid crazy bonuses

Soham Sarkar

The common trend here is that they are all B2C startups. I feel consumer-focused apps can go into this downward spiral.Now check VC backed startups like Freshworks, Razorpay etc. They are super healthy and I think more investors will start emphasizing b2b tech companies.

Jayanta Samaddar

b2b tech exists to serve the b2c companies. A company like Nike is the client of SAP. It all trickles down. No matter how many levels are there.

Soham Sarkar

True but b2b has much sounder unit economics and revenue generation fundamentals. You will rarely find a VC backed b2b tech startup operating at a loss for a long time.

Sandeep Balaji

For me i will tend to agree with Soham agree, most companies with mass layoff's are B2C startups which were uber funded, staff heavy and seriously lacked and still lacking unit economics. B2B folks have some degree of unit economics since their marketing is less costly and more targeted (#1). You don't need to raise truckloads of money and grab market share like B2C. Also the churn levels is lower in B2B than a simple user clicking and opting for another service.

Vaibhav Vats

Great observation...I had a belief right from the beginning, that this start-up culture of valuation is a bubble which can burst any moment and it has began with this pandemic. It was a good strategy though, to invest in innovative ideas and see through its successful implementation. But at the same time it had to be imperitive to see these ideas/start-ups to go self sustaining and being profitable to such extent that if market faces some short or some long term corrections, they would be able to survive through. Which is (unfortunately) not the case.

Pritam Sinha

It's not only startups which are losing money, everyone is. Your that corner-waala shop has also lost a lot of money. Please stop this negative thinking. It's a situation no one predicted.

Sathish CP

Yes indeed, to a very large extent its an end to valuation bubble game! At least for a short period of time, you will not be valued just based on no of users in case of B2C. We have seen this with a couple of startups we are helping in the investment positioning. Sustainability and profitability are key going forward. Always had been, but was not prioritised!

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