While Temasek-backed DeHaat farming marketplace laid off about 5% of its staff last year, other venture capital-backed companies like Bijak, Captain Fresh, BharatAgri and Gramophone have recently laid off workers, sources tell ET.
The Indore-based founder of Gramophone sacked around 75 employees during November and December last year to focus on achieving profitability over the next few financial quarters, co-founder and CEO Tauseef Khan told ET.
The company was earlier in the post expansion mode Raised $10 million in October 2021 From investors like Z3Partners and Info Edge. It currently has about 450 employees.
Captain Fresh, the meat retail platform powered by Tiger Global, has been trying to move its business from domestic to international markets since April last year.
This exercise resulted in 120 employees losing their jobs, founder and CEO Utham Gowda told ET. Company evaluation more than doubled to $500 million in March 2022, having raised $50 million.
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BharatAgri, which provides AI-based services to farmers on a paid subscription basis, laid off 40 employees in August. The Bengaluru-based company, which now has 52 employees, attributed the layoffs to a change in the way it sells products and services.Also read: Layoffs spread from ETtech Morning Dispatch to Dunzo, ShareChat, Rebel Foods and agritech
While DeHaat said the number of employees let go last year was less than a hundred and that all of the layoffs were based on performance and cultural fit, Bijak who also cut jobs did not respond to ET’s request for comment.
ETtechThe previously unreported layoffs came after a two-year period of strong financing activity. About 63% of the total investment capital invested in agritech has been deployed in India so far in the past two years, according to a report by investment banking firm Avendus Capital in December.
While 2021 saw $1.22 billion invested in 45 agritech startups, around $796 million entered 30 agritech startups in 2022.
Why these layoffs?
After invested capital faltered, agritech startups increased hiring activity, but now these companies are streamlining their operations.
At BharatAgri, for example, the company had a model where there was a sales team that was talking directly to users to sell subscriptions and products. “Over time, our product has evolved in such a way that users can purchase services and products without a phone call,” founder and CEO Siddharth Dayalani told ET, explaining the layoffs.
Based in Bengaluru The last time the company raised money was in September 2021 – $6.5 million In a round led by Omnivore, with participation from India Quotient and 021 Capital, both of which already own a stake.
ETtech“We see the current environment as a boon for the agritech sector as it will clear up a lot of the chaos in the space and without massive growth pressures a lot of companies will come out stronger with better unit economics,” said Khan of Gramophone.
He added, “Most companies have already taken the right steps over the past two quarters and we expect the results to start appearing this year.”
Business model challenges
“In general, we’re back to pre-pandemic levels for 2019 for seed rounds, like $2 million to $3 million; there are some exceptions but a few,” said Mark Kahn, managing partner of Omnivore, when asked about the current financing climate in the sector. For other rounds, he added, pre-money ratings are down 33% from their 2021 peak.
Startups in the space are still discovering initial challenges to business models, as some have succumbed to an investor-led push to scale gross merchandise value (GMV) without an active focus on gross margin, according to an industry insider.
GMV is the total value of goods sold by the company, and the gross margin is the amount left after subtracting the cost of goods sold from net sales.
“In terms of the business models that work in agritech, the input linkages are doing very well, and the output linkages are working very well in non-perishable products. In perishables and in branded fresh produce, they are only doing well in exports,” he said. Khan. “The whole ‘I buy vegetables from farms and then sell them to Kirana’ business model with nothing else is dead.”
Raising capital has been difficult in the past six or eight months. DeHaat’s $60 million raise in December took a long time to close, people familiar with the matter told ET.
“We can confirm that DeHaat’s current valuation after Series E funding is between $700 million and $800 million, which is about an 80% premium from the previous funding round that occurred less than 13 months ago,” a company spokesperson told ET.
DeHaat is among the top agritech startups by revenue, along with Waycool Foods & Products, which claimed to have posted Rs 1,008 crore in revenue in the fiscal year ending March 2022 (FY22).
Read also: 2022 REVIEW: Fund-hungry startups have laid off nearly 18,000 employees
DeHaat, based in Patna and Gurgaon, had revenues up 3.6 times to Rs 1,274 crore in FY22, according to the spokesperson.
“We are on track to deliver more than double that number in FY23… We are on an exponential growth trajectory with over 2.5 million farmers and 15,000 DIY centers expected by the end of FY23, which will be 3 times the growth from FY22 Being a well-capitalized organization, we aim to continue this growth trajectory in FY24 as well.”
Dahat said it employed 2,000 people until last year.
“There’s been a lot of growth lately and that’s why companies are stepping up and hiring more people… Now not everyone who’s hired will work at the same level, so you’re hiring very little, just like big companies do and keep,” said Akanksha Malik, founder of Growth360. , which helps startups hire mid- to senior-level people.
Omidyar Network India and Sequoia Surge-backed Bijak have also been tightening their policies on marketing and personnel costs recently, multiple sources told ET.
Three industry insiders confirmed that PJAC has laid off several employees. ET could not ascertain the exact number of layoffs.
However, Kahn of Omnivore, an investor in Bijak, denied the allegations and told ET that Bijak has years of funding left and no reason to cut its workforce.
The company operates a B2B agricultural commodity trading marketplace for agricultural suppliers and buyers, a slightly busier marketplace within agritech, competing with the likes of India-backed WayCool Foods and Products Lightrock, Arya-backed Quona Capital, Prosus-backed Vegrow and Walmart-backed Walmart. ninjacart.
“There is no dearth of capital to invest in the sector…but the question is what price are investors willing to pay. This is where a lot of deals get stuck,” Hemendra Mathur, venture partner at Bharat Innovation Fund and co-founder of ThinkAg, told ET.
(drawings and illustrations by Rahul Awsti)