Startup layoffs: Sequoia-backed Smallcase lays off 4% employees

Sequoia-backed fintech startup Smallcase has let go of employees under a restructuring exercise, Business Today has learned from sources. The same was also confirmed by the company in a statement to Business Today.

The company said in its statement that the layoffs were "a  part of normal course of business."

"Over the last 3 months, 4 per cent (15 members) of the team has been impacted as part of normal course of business," the statement read. 

But sources allege that the company is downplaying this development. 

"They have been silently laying off employees from past month or so after putting them on PIP. It is not business as usual; their losses are growing. The company is burning money in marketing and employees are having to face the heat. They are not prioritising employees," the source alleged.

As per the company's regulatory filing with the Ministry of Corporate Affairs, their losses stand at Rs 76.2 crore in FY 2021-22, up 196 per cent year-on-year (YoY) from Rs 28.3 crores in FY 2020-21.

The regulatory filings also highlight that the losses were driven by marketing and promotional expenses. The startup spent Rs 51 crore for marketing and promotions in FY 2021-22. This accounted for 43 per cent of its total expenses. In FY 2020-21, this figure stood at Rs 9.8 crores, less than 1/5th as compared to the spend in FY 2021-22.

Another source claimed that the Performance Improvement Program (PIP) was not active during 2021-22. 

"During 2021-22 bull market it was okay. Company was expanding so PIP was also not active. But now suddenly PIP has become active," the source said.

Smallcase is valued at $ 200 million as per its latest funding round in August 2021. The Sequoia backed startup raised $40 Mn in a Series C funding round led by Faering Capital. The startup was found in 2016 by IITians Vasanth Kamath, Anugrah Shrivastava, and Rohan Gupta. The fintech startup allows retail investors to invest in portfolios of broker-partner stocks and exchange-traded funds (ETFs).

Also Read: TCS, Infosys Wipro: How Credit Suisse, SVB collapse can impact Indian IT sector - BusinessToday

Also Read: 'Look back at 2008': How will Silicon Valley Bank collapse impact Indian IT sector? - BusinessToday