In order to migrate to a leaner cost structure and concentrate on its core business of offering doorstep gold loans, gold loans platform Rupeek has laid off 50 employees. The decision was made precisely three months after 180 employees were let go by the company as the funding slowdown began to have an effect on the startup sector.
Despite the layoffs, the company is optimistic about becoming profitable in the following 12 to 18 months, and the layoffs are a step in that direction.
“Taking cognizance of the subdued macroeconomic situation, we accelerated our efforts over the past few months to achieve profitability. As further clarity emerged, we have firmed up our strategy to turn profitable in the next 12-18 months and adapt to the quickly evolving market conditions,” a Rupeek spokesperson said in a statement.
According to information on Tracxn, Rupeek lost 156 crore rupees in FY21 due to expenses of 245 crore rupees and income of 88.6 crore rupees. Employee perks accounted for the company’s greatest annual spend, totaling Rs 120 crore.
At a time when investors are conducting more due diligence before making new investments and are emphasising the necessity for business models to have credible unit economics in place with a focus on being profitable, putting in place a path to profitability has become a critical need for startups.
This contrasts with the surge of cash in 2021, when a lot of investors were actually looking for businesses to invest in. The recent shift in investing behaviour was brought on by the worldwide slowdown.
“A transition towards a leaner cost structure combined with the recent closure of fundraises as per plan will ensure we are well capitalized in the above journey. This strategic step mandates us to restructure our workforce to unlock better synergies, and as a result of that, with deep regret and much deliberation, we had to part ways with ~5 percent of our total workforce.” The spokesperson added.