Over the past few months about 6,000 people have been fired from startups such as Cars24, Vedantu, Mfine and Meesho. According to data shared with us by talent consulting company Han Digital, almost half of them are being absorbed by IT companies, consulting and product companies, and global captive centres (GCCs). IT firms have been battling record attrition of late, so startups' loss is their gain.
Also in this letter: ■ Zomato Q4 Results: net loss jumps to Rs 360 crore
■ Despite regulatory hurdles, new crypto ventures abound
■ Invact Metaversity may wind down ops, cofounder says
Many tech pros return to IT firms after startup dreams fade
Many tech professionals are giving up on their startup dreams and
returning to a more stable work environment. What's happening? After losing talent to startups, which offered fat pay cheques, IT service providers such as Tata Consultancy Services (TCS), Infosys, Wipro and HCL are seeing many employees return.
Over the past few months, Indian tech startups, including unicorns such as Cars24, Vedantu, Mfine and Meesho, have fired nearly 6,000 people as they
scramble to cut cash burn and extend their runway. According to data shared by talent consulting company Han Digital, 40-50% of employees leaving startups are being absorbed by IT companies, consulting and product companies, and global captive centres (GCCs).
Record attrition: The
Indian IT sector reported record attrition in the previous quarter, with TCS' rate at 17.4%, Infosys at 27.7%, HCL Technologies at 21.9%, Wipro at 23.8% and Tech Mahindra at 24%.
They have, however, all reported some stability in quarterly attrition with better compensation and hikes, improved hiring, and measures to improve work-life balance.
Hiring intent remains strong at startups: Meanwhile, the recent job cuts at startups may be isolated events as
hiring intent still remains strong in the sector, according to a survey conducted for us by CIEL HR Services.
There is likely to be a 20-25% increase in the hiring of mid-to-senior talent by well-funded startups in the ongoing quarter compared with a year earlier, the survey found.
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Zomato Q4 Results: net loss jumps to Rs 360 crore
Zomato said on Monday that net losses in the
fourth quarter of FY22 stood at Rs 359.70 crore, a 2.5x jump from Rs 134 crore in the same quarter of FY21. It had reported a net loss of Rs 67.20 crore in the third quarter of FY22.
On a sequential basis, Zomato saw its total revenue grow to Rs 1,350 crore for the fourth quarter, a 7% jump from Rs 1259.70 crore in the third quarter. Zomato's total revenues in the fourth quarter of FY21 stood at Rs 750.8 crore.
Revenue from operations stood at Rs 1,211.8 crore for the fourth quarter of FY22.
FY22 results: On a consolidated basis, annual losses stood at Rs 1,222.5 crore in FY22, from Rs 816.42 crore in FY21.
The company also announced that its total revenue more than doubled to Rs 4,687.3 crore in FY22 from Rs 2,118.4 crore in the previous fiscal year. Revenue from operations also more than doubled to Rs 4,192.4 crore for the fiscal.
Halt on investments: The company said on Monday that it has roughly $1.6 billion (Rs 12,200 crore) worth of unrestricted cash but won't make any new minority investments from the $400 million corpus it had earmarked for its quick commerce aspirations.
Deepinder Goyal, the company's cofounder and chief executive, said, "There is currently no plan for any more minority equity investments at this stage given that we have covered most of the ground on our objectives."
Zomato's talks to
acquire quick commerce startup Blinkit (formerly Grofers) recently brought it under the scanner.
On March 15, it had said it
would extend a loan of up to $150 million to Blinkit, which has struggled to raise funds.
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Despite regulatory hurdles, new crypto ventures abound
Rohit Jain, head of recently launched CoinDCX Ventures, is
swamped with pitch decks from aspiring crypto entrepreneurs even as the spectre of a long and harsh crypto winter looms over the industry.
"Every week, we hear 20-30 pitches. In the past two to three months, when we hadn't even formally launched, we were getting close to 100 pitches every month, if not more," said Jain. "We have closed seven investments and two are in the final stages."
Social discovery and investment platform Flippy, which is currently in beta, recently raised $1.15 million in a seed round led by Redstart Labs and other key investors, including Justin Caldbeck and Alex Lin.
KoinBasket, meanwhile, raised $2 million in angel funding recently from Polygon's Sandeep Nailwal, Nimesh Kampani, and Ripple's Navin Gupta.
So why do Indian entrepreneurs still want to launch ventures in the crypto space, despite hostility from the government and the RBI?
"There is no good or bad time to launch. India is too big a market to be ignored. And after meeting some 40-45 fund managers, I can say that even they believe that policy bottlenecks will work themselves out in three to five years." said Bharat Vivek, co-founder, Kassio, a crypto asset management platform that received $1.5 million in pre-seed funding from Aalto Capital and others.
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Invact Metaversity may wind down ops, cofounder says
Metaverse edtech startup Invact Metaversity, cofounded by former Twitter India head Manish Maheshwari,
may wind down operations just days after launching its first cohort. The edtech startup has cancelled its first cohort and refunded money, with interest, to students who had enrolled for the course.
Founded in 2021 by Maheshwari and Tanay Pratap, Invact was building immersive educational courses in the emerging metaverse ecosystem.
Driving the news: Maheshwari wrote in a series of tweets on Monday that the company is "standing at crossroads" and exploring several options, including cutting its cash burn, pivoting to another idea, letting one of the founders run the startup, or even returning unspent capital back to its investors.
Maheshwari and Pratap have been at odds over the company's vision of late, which Maheshwari acknowledged in his tweets.
Big-name backers: In February, Invact had closed a $5 million seed round led by Arkam Ventures. It also raised funds from over 70 prominent global investors including tech giants Google, Microsoft and Meta.
Another Protonn? Invact's story is
reminiscent of Protonn's, a startup founded by former Flipkart executives Anil Goteti and Mausam Bhatt. It shut down in January, less than six months after picking up investor capital.
Head of Shopsy set to quit: Meanwhile, senior Flipkart executive Prakash Sikaria, who headed the company's new social commerce venture Shopsy,
is on his way out, sources said. Sikaria's exit comes at a time when Flipkart is doubling down on the new initiative.
TWEET OF THE DAY
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Startup funding woes may hurt IPL ad prospects
The funding tap is running dry at startups, and one major
casualty could be the Indian Premier League (IPL). According to trade pundits, over 50% of IPL advertising is from new-age companies.
"The last four-five years of IPL advertising has been fuelled by the funding frenzy of these tech start-ups, with VC-backing. Now, the funding is gone and there is no silver bullet," said a senior executive at a consulting firm.
For these companies, the only option is to reduce marketing spends, which will directly impact the IPL. "At any time, Rs 1,000-Rs 1,200 crore of advertising money can vanish from IPL," the executive added.
"Money on tap for new-age companies is over, which means over half of IPL's ad money is at risk," said Harish Thawani, former head of Nimbus Communications. "Choppy waters require careful navigation. Bidders will be wary."
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Marico picks up 54% stake in D2C health food brand True Elements
Marico Limited, maker of Parachute and Saffola oil, said it has
acquired a 54% stake in HW Wellness Solutions, owner of health food brand True Elements through a primary infusion and secondary buyouts. It did not disclose the size of the deal.
True Element, a digital-first brand in the healthy breakfast and snacks segment, clocked sales of Rs 54 crore in FY22. Its products include Western breakfast items such as oats, quinoa, muesli, granola and cornflakes, and Indian breakfast dishes such as poha, upma and dosa. It sells these products on more than 90 online platforms and more than 12,000 physical stores.
With this investment, True Elements aims to expand its offline presence over the next few years.
ETtech Done Deals
■ NextBillion.ai, a Singapore-based artificial intelligence (AI) spatial data and location mapping platform,
has raised $21 million in a funding round led by Mirae Asset Capital. It plans to use the funds to expand its market share in building and managing decentralised geospatial technology stacks for enterprises.
■ Ras Luxury Oils, a direct to consumer (D2C) luxury skincare and personal care brand,
has raised $2 million in a funding round from Sixth Sense Ventures. It said it would use the funds to develop and launch new product categories, expand deeper into marketplaces, and establish an international presence.
■ Minus Zero said it
has raised $1.7 million led by Chiratae Ventures, with participation from Jito Angel Network and senior executives from tech companies like Nvidia and Lyft. The deal marks the first time an Indian self-driving car company has attracted venture capital.
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Other Top Stories By our Reporters
Zepto explores medicine delivery: Quick-commerce startup Zepto may
launch online pharmacy delivery services. Founded by Stanford University dropouts Palicha and Kaivalya Vohra, Zepto launched its quick commerce service in April 2021.
Semiconductor packaging comes first: Amid India's frenetic drive to indigenise the supply of semiconductors,
packaging wafers will be the first node to be localised in the electronic component's supply chain, two industry veterans who are part of a government advisory panel told ET.
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Global Picks We Are Reading
■ What do Elon Musk and Jeff Bezos have in common? An unhealthy Twitter habit
(The Guardian) ■ DC attorney general sues Zuckerberg over Cambridge Analytica scandal
(The Washington Post) ■ GameStop launches digital wallet for crypto, NFTs
(WSJ) Today's ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai and Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi. 
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