Indian start-up land is facing layoffs from all directions. Online used car marketplace Cars24 let go of 600 employees on Thursday, adding to a list of high profile “unicorn” layoffs amid cash crunch and need to increase runways.
Official statement from a Cars24 spokesperson said “This is business as usual — performance linked exits that happen every year.” Cars24, before these layoffs, had a workforce of around 9000. 6.6% of Cars24 employees have faced the axe.
The move is believed to be in response to a funding crunch which is prevailing over the entire startup ecosystem. Since funding has not been easy to come by, and Cars24 has publically stated it’s intention to become a publically traded entity in the next 18-24 months, it isn’t too much of a stretch to assume these layoffs were made to cut costs wherever possible.
🚨 EXCLUSIVE: Used Car Seller Cars24 Has Laid Off Around 600 Employees
-> Cars24 has laid off employees mostly from lower positions across divisions
-> Sources have informed that the layoffs took place because the startup is trying to further automate operations and cut cost.
— Debarghya Sil (@debarghyawrites) May 19, 2022
Contrary to assumptions, Cars24 is on pace to expand into Australia, UAE and other countries. The company recently raised $400 million scattered across multiple investors in a series-G round, $300 million of which was raised in equity. The round put the firm’s value at a solid $3.3 billion. In the previous eight months, Cars24 had raised a collective $850 million from investors like SoftBank, Tencent and DST Global.
Cars24, not unlike it’s competitors CarDekho and Spinny, has not logged any profits since it was founded in 2015. Fintrackr analysis has showed that these companies have logged in losses ranging from ₹110-340 crore. The market has been conducive to the idea of Cars24 though, since used cars are becoming a go-to option ever since the economy started taking blows from global events like COVID-19, subsequent Chip Shortage and Russia-Ukraine War.
Cars24 joins other Indian startups like Unacademy, Meesho, Vedantu and Furlenco who have all recently had significant workforce layoffs as a consequence of a bottleneck on funding.