MC Tech3 | Third Wave Coffee brews bitter layoffs; Bhavish Aggarwal's Krutrim joins the AI race; and more

Indian startups have raised $7.1 Bn in the first nine months of 2023, down 68% compared to approximately $22 Bn raised during the corresponding period last year. While the current scheme of things has prompted many marquee investors to instruct their portfolio startups to cut costs and increase runways, many founders seem to have caused a bloodbath in the job market in the name of undertaking cost-cutting measures. moneycontrol.com

Since the onset of the funding winter in 2022, an estimated 34,785 employees have been laid off by 121 Indian startups! As many as 24 Indian edtech startups, including six of the seven edtech unicorns, have fired 14,616 employees since last year! As many as 15,247 employees have been fired by 69 startups so far this year, highlighting the fact that the situation around job cuts has hardly improved. moneycontrol.com

From Funding High to Layoff Sigh: Despite the influx of $340 million in funding, Udaan will lay off about 120 employees, or 6% of its workforce of 1,600, by the end of the year! Several startups grapple with operational sustainability.😧😧😧 The layoffs are related to the company merging its food and non-food division units. Last November, Udaan laid off 350 employees across department functions in a move to drive cost efficiency. Before that in June 2022, the firm sacked 180 employees. A striking indicator of this struggle is the layoff of over 28,000 employees in just the first three quarters of 2023. Layoffs Amidst Funding - Is the Path to Profitability Paved with Job Cuts? moneycontrol.com LinkedIn News India

The word "start-up" has an element of glamour. Even though it has technological support, the fundamental requirement of business viability remains the most crucial determinant of financing or, for that matter, business longevity. While the allure of a start-up may be exciting, investors and lenders ultimately look for a solid business model that can generate sustainable profits. As for lenders, it is strange to see them stake millions of dollars on ideas and become vigilant about even a few hundred thousand dollars when it comes to financing brick-and-mortar businesses with proven business models. This discrepancy in investment behaviour highlights the importance of a robust business model. The brick-and-mortar business offers less yet stable ROI, year after year. This stability is appealing to lenders as it minimizes their investment risk. Therefore, while marketing plays a crucial role in attracting customers and driving sales, it is equally essential for entrepreneurs to focus on building a solid business foundation that can withstand the ups and downs of the market. Without a clear path to profitability, no amount of technological innovation or flashy marketing can guarantee long-term success.

While startups may face challenges in balancing business goals and employee well-being, it is important to note that layoffs can be a necessary step for the survival and growth of a business. It requires careful consideration and effective strategies to overcome this challenge. For example, a tech startup facing financial difficulties may decide to lay off a significant portion of its workforce to reduce costs and stay afloat. However, if the company fails to support the emotional and financial well-being of the remaining employees, it may lead to decreased morale, increased turnover, and ultimately hinder the company's chances of recovery. Therefore, implementing measures such as open communication channels, providing resources for upskilling or retraining, and offering severance packages can help strike a balance between business goals and employee well-being.