Exclusive: Dealshare lays off 100 employees; Oyo eyes first profitable year

Also in this letter:
■ Might mark first full year of Ebitda profitability, Oyo tells employees
■ Smartphone shipments fell 9% in 2022: report
■ Stripe hires JPMorgan, Goldman Sachs to explore liquidity raise

Exclusive: Dealshare lays off 100 as it revamps business plan

Ecommerce firm Dealshare has laid off around 100 employees, or over 6% of its 1,500-strong workforce, according to multiple people aware of the development. Dealshare, backed by Tiger Global and Alpha Wave Global, joins a growing number of startups that have fired employees in the new year to cut costs and rationalise operations.

Belt-tightening: “We have removed 100 roles and this is linked to our business plan for the next financial year,” Dealshare founder Sourjyendu Medda told us.

“From a strong focus on growth to achieve a large market share, we made substantial changes to our plans to focus on first driving profitability,” he added. “This has led to our burn falling to less than 40% of our peak burn and our cash runway increasing to close to four years.”

He added that Dealshare has also reduced its focus on several initiatives and contained its geographical spread.

The company expanded to about 150 cities and towns last year and it has now paused operations in the bottom 20% of these, he said.

Tough times: According to sources aware of the matter, the company has seen a drop of over 30% in its annualised gross merchandise value (GMV) run-rate at around $600 million compared to its peak GMV run-rate of $900 million (based on the current dollar rate).

Layoffs in 2023: Startups like ShareChat, Swiggy, Dunzo, Rebel Foods, Innovaccer and others have fired scores of employees in 2023, citing a tough liquidity market, overhiring and overestimating growth for the year.

Expect first full year of Ebitda profitability, Oyo tells employees

Oyo told employees at a recent town hall that its adjusted Ebitda for the second half of FY23 is expected to rise to Rs 185 crore, potentially marking the company’s first full financial year of adjusted Ebitda profitability.

The hospitality chain had reported an adjusted Ebitda of Rs 63 crore in the first half of this financial year.

Jargon buster: Ebitda stands for earnings before interest, taxes, depreciation and amortisation and is a measure of a company’s profitability.

Oyo has previously defined ‘adjusted Ebitda’ as Ebitda being adjusted for transformation expenses made on assets of its hotel partners.

By the numbers: People familiar with the matter said the company also told employees that revenue for the second half of this fiscal is expected to be over Rs 2,800 crore, growing 15% year from the second half of FY22.

The company also said its overall gross booking value (GBV) is expected to jump 23% to over Rs 9,990 crore in FY23, primarily led by the hotels business. Homes is the other storefront segment for Oyo.

Growth drivers: Sources said the company told staffers the almost three times jump in adjusted Ebitda could be attributed to a reduction in costs led by ‘operational efficiencies’, a growth in its hotels business and ‘continued’ operational profitability.

IPO delay: We reported on December 31 that Sebi had asked Oyo to update its risk factors, key performance indicators (KPIs), outstanding litigations, and basis for valuation in its draft IPO papers.

The company said this month it is planning to refile its application by the middle of February.

ETtech Deals Digest: Startup funding falls over 90% this week

Indian startups raised $123 million in funding in 20 rounds this week, a whopping 94% drop from the same week last year when investments worth almost $2 billion were poured into the Indian startup ecosystem, according to data compiled by market intelligence platform Tracxn. This also represents a 77% drop in funding from last week, when startups raised $532 million in 20 rounds.

According to a Bloomberg report, SoftBank Group, one of the largest investors for tech-led and emerging businesses, saw its bets in new startups fall to a record low last quarter. It participated in just eight rounds totaling $2.1 billion in the quarter ended December. This was the first time the number of SoftBank deals fell to single digits since the inception of its Vision Fund in 2017.

Here is a list of startups that raised funds this week.

Smartphone shipments fell 9% in 2022: report

Smartphone shipments declined 9% to 152 million units in 2022, as demand in the entry-level segment suffered even as the premium segment continued to rise, capturing a double-digit share amidst growth in retail prices, according to a report from Counterpoint Research.

Zoom out: This is the second ever annual decline in the Indian smartphone market, the first being in 2020 on account of the pandemic-induced lockdowns.

Xiaomi on top: In Q4 2022, Samsung took the top spot with a 20% market share, with Vivo coming in second with an 18% share. Xiaomi slipped to the third spot with an 18% share, clocking a 24% on-year decline in shipments. However, for the whole of 2022, Xiaomi remained on top with a 20% share, followed by Samsung with 19% and Vivo with 16%.

Chinese brands decline: Despite a sharp decline in shipments, smartphone market revenue remained flat. Apple rose from the fourth position in 2021 in revenue terms to the second spot in 2022 thanks to iPhone 13. Chinese brands saw a decline in value share cumulatively, capturing a 60% revenue share in 2022, as compared to 65% in 2021.

Stripe hires JPMorgan, Goldman Sachs to explore liquidity raise

Stripe Inc., one of the world’s most valuable startups, has hired JPMorgan Chase & Co. and Goldman Sachs Group Inc. as it explores options for raising liquidity, according to a Bloomberg report.

The company is weighing a direct listing or a private market capital raise, according to the report.The company is hoping to raise money through either option in the next year, so that veteran employees with expiring restricted stock units can cash in, the report said.

Why it matters: The move comes after Stripe told staff late last year that it would cut more than 1,000 jobs as it seeks to rein in costs ahead of any economic downturn. The company’s cofounders Patrick and John Collison had said in November that the company was over-optimistic about the internet economy in 2022-23 and underestimated the impact of a broader slowdown.

Valuation drop: Stripe and other tech firms have seen valuations drop as the growth in online spending slowed in the aftermath of the pandemic. Stripe has cut its internal valuation multiple times, most recently to $63 billion, according to reports. That’s far lower than the $95 billion valuation it had received from investors in its most recent fundraising.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.