Open, a fintech unicorn backed by Temasek, has implemented workforce reductions by laying off 47 employees. This move follows a trend among startups facing challenges in the macroeconomic environment in recent years.
As Open, the Kerala-based company, aims to optimise its operations, it has implemented a layoff, as stated in a company statement. Additionally, the founders, Anish Achuthan, Mabel Chacko, Ajeesh Achuthan, and Deena Jacob, have taken a 50% pay cut in an effort to achieve profitability, reported VCCircle.
According to Jacob, one of the co-founders, Open had set a goal to achieve profitability by FY25 as stated in an interview with VCCircle last year. However, the financials for the year ended March 31 have not been disclosed yet.
In FY22, the company's losses widened to Rs 167.6 crore compared to a loss of Rs 65.6 crore in FY21, primarily due to higher expenditure. On the other hand, the operating revenue for FY22 increased sevenfold to Rs 40.9 crore compared to FY21.
“Our recent staffing changes were driven solely by performance evaluations. We also ensured deserving high performers get 20%-30% average hikes and employee stock option plans. We are actively hiring across critical functions such as growth marketing, product, and sales and are one of the very few startups with visibility on profitability and runway above 30 months to well face the market conditions,” said one of the founders Achuthan.
Open provides a neobanking platform catering to small and medium enterprises (SMEs), enabling financial institutions to launch their own SME neobanking offerings for their customers. In May of last year, the startup successfully raised $50 million in a Series D funding round, led by IIFL Finance, which resulted in its valuation crossing $1 billion, doubling from the previous Series C fundraising round in September 2021.
The Series D funding round of Open also saw participation from prominent investors such as Tiger Global, Temasek, and 3one4 Capital. In addition, Open boasts an impressive list of investors including Visa, Beenext, Recruit Strategic Partners, Speedinvest, Tanglin Venture Partner, AngelList, and Unicorn India Ventures.
Open is just one of many startups that have had to implement layoffs this year, as venture capital firms have become more cautious with their investments after a period of heavy funding in the previous two years. Other notable startups that have also reduced their workforce include ShareChat (backed by Google), Dunzo (a quick commerce firm), Rebel Foods (backed by Sequoia), Ola (backed by SoftBank), and Moglix (backed by Tiger Global), among others.
Additionally, several ed-tech companies such as Byju's, upGrad, Unacademy, and Vedantu have also resorted to layoffs as a cost-cutting measure when physical classes resumed in schools and colleges.