The start of the new financial year has been sombre for many startup employees as news of layoffs and in some cases, shutdowns, began surfacing.
The reasons are the same across sectors—tepid market growth and the arrival of a “funding winter.”
Multiple growth investors have sent advisories to their portfolio companies to conserve cash, including the likes of Sequoia Capital, BEENEXT, and others, as growth rounds become sparse.
Investments by private equity and venture capital firms in Indian companies declined by 27 percent in April 2022 to $5.5 billion across 117 deals, according to a recent report by industry body IVCA (Indian Venture and Alternate Capital Association) and Ernst & Young. The report also said that monthly startup investments have plunged 50 percent, on a year-on-year basis, due to a slowdown in large funding rounds.
Startups in edtech, ecommerce, and the direct-to-consumer (D2C) and transport aggregator sectors have been hit the most.
Edtech companies including Vedantu, Unacademy, BYJU’Sbacked WhiteHat Jr, Lido Learning , and more recently, Eruditus , have laid off about 2,255 employees during the year.
Despite the chaos, startups across stages continue to hire in key roles, as the demand for tech talent continues to rise.
Edtech firm upGradannounced that it is planning to add 3,000 people over the next three months. Payments company PhonePe is also among the startups hiring this year.
Core engineering and product roles continue to see demand from startups as well as technology companies. According to the monthly Naukri JobSpeak report, hiring was up 40 percent year-on-year in May 2022.
PhonePe’s Rahul says the company will be hiring people across functions such as core engineering, DevOps, and design, as well as for analytics, business development, sales, and marketing.
This is echoed by Yeshab Giri, Chief Commercial Officer, Staffing and RT Professionals at Randstad India, who says the company expects 41 percent of performing technology companies and new-age startups to continue hiring in 2022-23.