Whereas Temasek-backed DeHaat farming market laid off about 5% of its employees final yr, different enterprise capital-backed firms like Bijak, Captain Contemporary, BharatAgri and Gramophone have not too long ago laid off staff, sources inform ET.
The Indore-based founding father of Gramophone sacked round 75 workers throughout November and December final yr to deal with reaching profitability over the subsequent few monetary quarters, co-founder and CEO Tauseef Khan informed ET.
The corporate was earlier within the put up growth mode Raised $10 million in October 2021 From buyers like Z3Partners and Data Edge. It presently has about 450 workers.
Captain Contemporary, the meat retail platform powered by Tiger World, has been attempting to maneuver its enterprise from home to worldwide markets since April final yr.
This train resulted in 120 workers dropping their jobs, founder and CEO Utham Gowda informed ET. Firm analysis greater than doubled to $500 million in March 2022, having raised $50 million.
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BharatAgri, which offers AI-based companies to farmers on a paid subscription foundation, laid off 40 workers in August. The Bengaluru-based firm, which now has 52 workers, attributed the layoffs to a change in the best way it sells services and products.Additionally learn: Layoffs unfold from ETtech Morning Dispatch to Dunzo, ShareChat, Insurgent Meals and agritech
Whereas DeHaat mentioned the variety of workers let go final yr was lower than 100 and that all the layoffs had been primarily based on efficiency and cultural match, Bijak who additionally reduce jobs didn’t reply to ET’s request for remark.
The beforehand unreported layoffs got here after a two-year interval of robust financing exercise. About 63% of the overall funding capital invested in agritech has been deployed in India to this point up to now two years, based on a report by funding banking agency Avendus Capital in December.
Whereas 2021 noticed $1.22 billion invested in 45 agritech startups, round $796 million entered 30 agritech startups in 2022.
Why these layoffs?
After invested capital faltered, agritech startups elevated hiring exercise, however now these firms are streamlining their operations.
At BharatAgri, for instance, the corporate had a mannequin the place there was a gross sales staff that was speaking on to customers to promote subscriptions and merchandise. “Over time, our product has advanced in such a means that customers should buy companies and merchandise with out a cellphone name,” founder and CEO Siddharth Dayalani informed ET, explaining the layoffs.
Primarily based in Bengaluru The final time the corporate raised cash was in September 2021 – $6.5 million In a spherical led by Omnivore, with participation from India Quotient and 021 Capital, each of which already personal a stake.
“We see the present surroundings as a boon for the agritech sector as it’ll clear up a number of the chaos within the house and with out large progress pressures a number of firms will come out stronger with higher unit economics,” mentioned Khan of Gramophone.
He added, “Most firms have already taken the fitting steps over the previous two quarters and we anticipate the outcomes to begin showing this yr.”
Enterprise mannequin challenges
“On the whole, we’re again to pre-pandemic ranges for 2019 for seed rounds, like $2 million to $3 million; there are some exceptions however a number of,” mentioned Mark Kahn, managing accomplice of Omnivore, when requested in regards to the present financing local weather within the sector. For different rounds, he added, pre-money scores are down 33% from their 2021 peak.
Startups within the house are nonetheless discovering preliminary challenges to enterprise fashions, as some have succumbed to an investor-led push to scale gross merchandise worth (GMV) with out an lively deal with gross margin, based on an trade insider.
GMV is the overall worth of products offered by the corporate, and the gross margin is the quantity left after subtracting the price of items offered from internet gross sales.
“When it comes to the enterprise fashions that work in agritech, the enter linkages are doing very properly, and the output linkages are working very properly in non-perishable merchandise. In perishables and in branded recent produce, they’re solely doing properly in exports,” he mentioned. Khan. “The entire ‘I purchase greens from farms after which promote them to Kirana’ enterprise mannequin with nothing else is useless.”
Elevating capital has been tough up to now six or eight months. DeHaat’s $60 million elevate in December took a very long time to shut, individuals accustomed to the matter informed ET.
“We are able to verify that DeHaat’s present valuation after Collection E funding is between $700 million and $800 million, which is about an 80% premium from the earlier funding spherical that occurred lower than 13 months in the past,” an organization spokesperson informed ET.
DeHaat is among the many prime agritech startups by income, together with Waycool Meals & Merchandise, which claimed to have posted Rs 1,008 crore in income within the fiscal yr ending March 2022 (FY22).
Learn additionally: 2022 REVIEW: Fund-hungry startups have laid off almost 18,000 workers
DeHaat, primarily based in Patna and Gurgaon, had revenues up 3.6 instances to Rs 1,274 crore in FY22, based on the spokesperson.
“We’re on observe to ship greater than double that quantity in FY23… We’re on an exponential progress trajectory with over 2.5 million farmers and 15,000 DIY facilities anticipated by the top of FY23, which will probably be 3 instances the expansion from FY22 Being a well-capitalized group, we intention to proceed this progress trajectory in FY24 as properly.”
Dahat mentioned it employed 2,000 individuals till final yr.
“There’s been a number of progress currently and that is why firms are stepping up and hiring extra individuals… Not everybody who’s employed will work on the similar degree, so that you’re hiring little or no, similar to large firms do and preserve,” mentioned Akanksha Malik, founding father of Growth360. , which helps startups rent mid- to senior-level individuals.
Omidyar Community India and Sequoia Surge-backed Bijak have additionally been tightening their insurance policies on advertising and personnel prices not too long ago, a number of sources informed ET.
Three trade insiders confirmed that PJAC has laid off a number of workers. ET couldn’t confirm the precise variety of layoffs.
Nevertheless, Kahn of Omnivore, an investor in Bijak, denied the allegations and informed ET that Bijak has years of funding left and no cause to chop its workforce.
The corporate operates a B2B agricultural commodity buying and selling market for agricultural suppliers and consumers, a barely busier market inside agritech, competing with the likes of Lightrock-backed WayCool Meals and Merchandise, Arya-backed Quona Capital, Prosus-backed Vegrow and Walmart-backed. ninjacart.
“There isn’t a dearth of capital to spend money on the sector…however the query is what value are buyers prepared to pay. That is the place a number of offers get caught,” Hemendra Mathur, enterprise accomplice at Bharat Innovation Fund and co-founder of ThinkAg, informed ET.
(drawings and illustrations by Rahul Awsti)