Backed by Tiger Global, Vedantu was last valued at $1 billion
Online tutoring company Vedantu on Wednesday said it had laid off more than 400 employees or about 7 per cent of its workforce as Indian startups, across sectors, reel under a downturn that could slam the brakes after years of unprecedented growth.
"Out of 5,900 Vedans, 424 of our fellow teammates, i.e. about 7% of our company, will be parting with us. This has been an extremely difficult call to make," CEO Vamsi Krishna said in an email that was also posted on the company website.
Calling it one of his "toughest decisions", Mr Krishna blamed a "tough external environment".
"War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters. With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 9X, Vedantu experienced during the last 2 years will also get moderated," he said.
"It is days like these that are heartbreaking, and I hope to never see them again... At a personal level, I find it gut-wrenching to live through such a decision and to feel that somehow my decisions have led to such consequences. There is no way around this thought," Mr Vamsi added.
"There is no easy way to say this, but I am truly sorry," he added.
Backed by Tiger Global, Vedantu was last valued at $1 billion. The lay-offs come amid a slump in India's startups, which raised a record $35 billion in new funds in 2021, but now face a dramatically different environment, as corporate governance concerns loom large for investors facing a new uncertainty in global markets.
There are also concerns that valuations in India are already too high, even when startups' business models are being led by discounts and there is a bleak outlook for revenue, experts quoted by news agency Reuters said on Wednesday.
April was the first month in more than a year that India had no new "unicorns", a term for startups with valuations above $1 billion. Indian startups raised $5.8 billion in March and April, down about 15% from the corresponding period last year, according to data from Venture Intelligence.