Major startups across the world witnessed a slump in business owing to the lockdown imposed to curb Coronavirus spread. However, the startups have shown variety in their dealing with employees. Complete Coverage: Coronavirus
Crux of the Matter
Indian Startups Ola Ola witnessed a revenue drop of 95% since the lockdown started in 2020. As social distancing and decrease of travel would prevail even after lockdown, Ola laid off 1,400 (35%) of its employees by email. However, the company said they would be receiving 3 months’ salary and insurance coverage.
Swiggy Similarly, Swiggy laid off 1,100 (13%) of its permanent employees by email who would receive 3 months’ salary and insurance coverage. After a loss of Rs 2,367 crore in 2019, Swiggy saw further loss due to the lockdown.
Covid hit us with huge blow of uncertainty, forcing us to look even harder at our cost base and preparedness for the road ahead.
OYO Already suffering a net loss of $335 million in 2019, OYO’s revenue dropped by 50-60% in 2020 due to the lockdown. It would be laying off 5,000 employees across the world.
Recession to Recession Lyft The ride-sharing company already oversaw a net loss of more than $2.6 billion in 2019, which worsened due to the lockdown. It decided to lay off 982 (17%) of its employees.
Uber The cab-giants had to close down 45 of their offices as they suffered further loss by lockdown restrictions, which decreased their passenger revenue by 80%. It is in the process to lay off ~500 employees in India. The company has already fired around 6,700 employees.
We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill. Airbnb’s business has been hit hard…Some very sad news. Today, I must confirm that we are reducing the size of the Airbnb workforce.
Brian Chesky, Airbnb Co-founder and CEO
Airbnb One of the fastest-growing startups, the property lending agent suffered a loss of $674 million in 2019. Its woes were severed by the lockdown, which reduced its booking rates by 85% and increased the cancellation rate to 90%. It laid off nearly 25%, 1900 of its employees.
Facing The Storm On the other hand, some companies have endured the lockdown well without laying off any employees.
UrbanClap Formerly known as UrbanClap, the company has not laid off any employee. They have provided interest-free loans to more than 22,000 of its service employees in the pandemic. They have also introduced ‘Suraksha Holidays’, where a worker feeling unwell can take leave and receive Rs 500 daily.
HCL The tech giants have not fired any employee of their total 150,000-employee workforce. They have not cut the workers’ salary either and will provide the bonuses as promised earlier. Moreover, they would also be honoring the contracts of freshers.
Silicon Valley is a region in the San Francisco Bay Area in Northern California that serves as a global center for high technology, innovation, venture capital, and social media. The area is home to many of the world’s largest high-tech corporations, including the headquarters of more than 30 businesses in the Fortune 1000, one-third of all of the venture capital investment in the United States and employees about a quarter of a million information technology workers.
Walter Anthony Barringer Dinteman is a retired sales executive who drives for Uber as a retirement Job. In 2018, Walter published his book “Uber and Out” which is a compilation of stories gathered from his experience as an Uber driver.
Softbank is an investor in both Uber and Ola. Softbank’s Vision Fund is the world’s largest technology-focused venture capital fund, with over $100 billion in the capital.
Rupeek, a gold-backed online lending platform has raised $60 million from GGV Capital, Bertelsmann India Investments, Binny Bansal, KB Investments, Tanglin Venture Partners, Sequoia India, and Accel Partners.
Crux of the Matter
Gold to Rupees to Rupeek The fintech startup, founded in 2015, enables local big banks to offer loan products by collecting and depositing the gold at the nearest branch of the partner banks that offered the loan. Rupeek has turned the idle lying asset, gold, into an easy way to get a loan at affordable rates for someone who wants to grow her small business or pay for emergency needs.
Our plan is to scale existing and newer channels for gold monetization. We aim towards working to improve the accessibility of credit in the country.
– Sumit Maniyar, Rupeek CEO
The startup currently operates in 10 cities namely Bengaluru, Mumbai, New Delhi, Jaipur, Chennai, Ahmedabad, Surat, Mumbai, Coimbatore, and Pune.
Gold Digger’s Journey The company will be investing the raised funds in technology and customer acquisition. It aims to reach 1 billion Indians by 2022 across 100 cities. Managing Partner of GGV Capital Hans Tung believes ‘gold has long been a favorite way to save and invest for India’s middle-class households.’
According to a statement by Rupeek, India has almost 90% of its gold lying idle and it aims to monetize India’s $1 trillion gold and help the country achieve its $5-trillion economy goal by 2025. The company had raised $2 million from Sequoia Capital in 2017 and $6.8 million series A funding from Accel Partners in 2018. In 2019, it secured $30 million in Series B funding from Bertelsmann India Investments.
Rupeek is an asset-backed online lending platform, it is disrupting traditional brick-and-mortar lending model. With low operational costs and credit evaluation tools, the fintech makes credit cheaper for borrowers and investing more valuable for lenders. It offers valuable lending solutions at the most affordable interest rates in the market with delightful customer experience for our borrowers. They charge zero processing fee and offer lower interest rates, personalised support, on-demand pickup and return of the valuables. More Info
Asset-based lending is any kind of lending secured by an asset which basically suggests that if the loan is not repaid, the asset is taken. More commonly, however, the phrase is used to describe lending to business and large corporations using assets not normally used in other loans. Typically, these loans are tied to inventory, accounts receivable, machinery and equipment. Other forms of secured loans include loans against securities – such as gold, shares, mutual funds, bonds, etc. Gold loans are issued to customers after evaluating the quantity and quality of gold in the items pledged. More Info
Online food delivery platform Zomato acquired the Indian operations of Uber Eats, the food delivery platform run by Uber, for around $350 million (Rs 2,485 crore). The merger will consolidate the market and will give a strong competition to Swiggy.
Crux of the Matter
Uber Eats will cease to exist as a separate brand locally. and its users on its platform will be redirected to Zomato’s app.
Zomato will not absorb Uber Eats’ team in India resulting in reallocation or laying off of around 100 executives.
Both combined Zomato and Uber Eats India is expected to cover nearly 50-55% market share in terms of the number and value of orders.
Uber Eats had a stronger hold compared to Zomato in parts of Tamil Nadu, Kerala, and Madhya Pradesh, with about 30% market share.
Uber Eats had tried selling the business to Swiggy but the deal could not be completed.
Uber had projected an operating loss of Rs 2,197 crore in its food delivery business for the five months through December 2019.
Uber had halved its annual cash allocation to the food-delivery business in India to $90-120 million, which had a direct impact on the order numbers.
Uber had relied heavily on discounting to acquire and retain users. While it could only establish market leadership in some small towns and cities.
Also, at the same time, Uber’s India rival Ola too had pulled its focus away from its food-delivery business, Foodpanda, and started to sell private brands on marketplaces.
Zomato is an Indian restaurant aggregator and food delivery start up founded by Deepinder Goyal in 2008. Zomato provides information, menus and user-reviews of restaurants, and also has food delivery options from partner restaurants in select cities. Zomato has acquired 12 startups globally. In July 2014, Zomato made its first acquisition by buying Menu-mania for an undisclosed sum. The company pursued other acquisitions such as lunchtime.cz and obedovat.sk for a combined US$3.25 million. In September 2014, Zomato acquired Poland-based restaurant search service Gastronauci for an undisclosed sum. Zomato also acquired Seattle-based food portal Urbanspoon for an estimated $60 million in 2015. More Info
HighRadius, venture by an entrepreneur of Indian origin – Sashi Narahari, has become the first Unicorn of 2020. In the series B funding round, it raised $125 mn from San Francisco-based ICONIQ Capital to reach untapped geographies and escalate platform development.
Crux of the Matter
HighRadius was founded in 2006 by IIT Madras alumnus, Sashi Narahari. It remained bootstrapped for 11 years and received funding in 2017. It has become the first company of 2020 to become a Unicorn.
HighRadius enables AI-powered solutions to companies. Its Software as a Service (SaaS) provides the key service of automating financial functions of trade receivables and treasury management.
Taking into account bank statements, sales orders, purchase orders, expenses, and other incomes, HighRadius provides Cash Management with the help of AI and Machine Learning.
Headquartered in Houston and India, it is also backed by Susquehanna Growth Equity and Citi Ventures. It customers include more than 200 companies from Forbes Global 2000 companies. Adidas, Reebok, Walmart, Starbucks, Johnson & Johnson, Hindustan Unilever, P&G, Sony, etc. are among some of its top clients.
ICONIQ Capital investment will be used to tap new geographies and elevate platform development. “Its platform is game-changing for CFOs and finance departments,” said a partner at ICONIQ Capital.
A unicorn is a privately held startup company valued at over $1 billion. The term was coined in 2013 by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures. Decacorn is a word used for those companies over $10 billion, while Hectocorn is used for such a company valued over $100 billion. According to TechCrunch, there were 279 unicorns as of March 2018. The largest unicorns included Ant Financial, DiDi, Airbnb, Stripe and Palantir Technologies. Lyft is the most recent decacorn that turned into a public company on March 29, 2019. More Info
A notification from the Indian government is expected to ease the statutory norms forstartups in the embryo stage. Extending the major exemptions for up to 10 years, allowing sweat equity issuance of up to 50% of paid-up capital, relaxation in compliance norms, are among the changes proposed to boost the operational and financial capability of Indian Entrepreneurs.
Crux of the Matter
Department for Promotion of Industry and Internal Trade (DPIIT), earlier this year, amended the law to extend the recognition period of the startups for up to 10 years from incorporation.
Proposing changes in the Companies Act to create a thriving environment for startups, India is eyeing to relax them for 10 years from a regulation that restraints private companies from raising deposits more than 100% of their paid-up capital.
To boost the entrepreneurial spirit in the country, the Finance Ministry has also announced exemption from Angel Tax – a tax levied on investments acquired at more than fair market value.
Parliamentary approval for some changes like the exemption from filing CFS in annual returns and extension of the period of the board meeting to 6 months every 4 years and the others will likely bring efficiency in the operations of the startups.
Make in India, a type of Swadeshi movement covering 25 sectors of the Indian economy, was launched by the Government of India on 25 September 2014 to encourage companies to manufacture their products in India and enthuse with dedicated investments into manufacturing. Its objectives include job creation and skill enhancement in multiple sectors and “to transform India into a global design and manufacturing hub”. As a result of investment interest generated by this movement, India emerged as the top destination globally in or foreign direct investment (FDI), surpassing the United States and China in 2015. It has also led to a steady increase in India’s rank in World Bank’s “Ease of Doing Business” rating, where currently it stands at 63, having improved by 79 ranks since 2014. Read More