dealshare layoffs: Exclusive: Dealshare lays off 100 as Tiger Global-backed startup reworks business plan
Confirming the development, Dealshare founder Sourjyendu Medda said the decision is linked to his business plan for the next financial year with a focus on profitability.
“Given the massive market downturn that started early to mid last year, we had to rethink our business strategy and make changes to our execution plan accordingly,” he told ET. “From a strong focus on growth to achieving large market share, we made substantial changes to our plans to focus first on driving profitability.”
The move has helped the company, backed by Tiger Global, Matrix Partners and Alpha Wave Global, reduce its monthly burn “to less than 40% of our maximum burn” and increase its cash margin, or time to exhaustion. the cash balance at the current consumption rate, about four years out, Medda said.
With this development, Dealshare joins a growing number of startups that have laid off employees in the new year to cut costs and streamline operations amid prolonged funding constraints and slowing growth.
Dealshare has seen its annualized Gross Merchandise Value (GMV) run rate drop by a third to around $600 million from its peak GMV run rate of $900 million (based on current dollar rate) last year. , people familiar with the matter told ET .
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The company “has also seen its gross sales drop as it has been trying to reduce burning,” one of them said. Medda said Dealshare narrowed its focus on several initiatives and contained its geographic spread, which would have required long-term cash investments “before becoming fully profitable, resulting in our gross revenues rationalizing to about 60% of our maximum earnings”.
The Bangalore-based company had expanded to around 150 cities and towns last year and has now halted operations in the bottom 20% of these.
Started by Medda, Vineet Rao, Rajat Shikhar and Sankar Bora in 2018 as a group buying platform, Dealshare has been repositioning itself as a direct-to-consumer e-commerce company, offering a range of products to low-income consumers. It sells groceries and other essentials along with general merchandise and some fashion items largely in the Rs 300-400 average sales price segment.
The company also supplies products to kirana (corner) stores along with creating a B2B2C model whereby customers can purchase products they find online at a nearby offline kirana store that the company has partnered with. .
The bulk purchase model is now an insignificant part of your total business.
Dealshare became a unicorn in January last year after closing a $165 million financing round of Tiger Global, Alpha Wave and others.
Last month, he tied up ex Big Bazaar CEO Kamaldeep Singh as Chairman of its retail business. At the time of Singh’s appointment, Rao had said that Dealshare was registering around 400,000 orders a day.
startup layoffs
Dealshare’s job cuts underscore a growing trend among startups looking to restructure operations and work their way to profitability. startups like ShareChat, swiggy, Dunzo, rebel foodsInnovaccer and others have laid off dozens of employees, citing a tight liquidity market, excessive hiring and overestimation of growth for the year.
“Our over-hiring is a case of poor judgment and I should have done better here,” the Swiggy chief executive said. Sriharsha Majety told employees last week after laying off 380 of her staff.
(Illustrations and graphics by Rahul Awasthi)