As the startup scenario in India continues to flourish, their ever-increasing dependence on investors’ funds is rather scary. Not getting enough funds leads them to take some harsh decisions, specially cutting-off their workforce.
A similar case happened recently with an Indian hospitality firm, Ruptub Solutions, the company that operates Treebo Hotels. It is reported by The Economic Times that Treebo has laid off about 120 employees or 20% of its workforce due to a potential decrease in the company funds. The three people familiar with the development told that a failure to raise funds to have smooth operation forced the startup to take this harsh decision.
Earlier it was reported that the French Hotel Chain, Accor, SA was in talks of investing about $40 million in Treebo.
An employee told ET that “The regional business heads communicated this to us, and it came as a shock since the whole company was on an aggressive hiring spree. We have been given a month of severance pay, and an assurance of a recommendation for a job.”
The TECHCiRCLE reported that Sidharth Gupta, co-founder of Treebo, held a town hall on July 9 to inform the employees about the layoffs. The town hall lasted for less than five minutes and no major queries raised at that time were answered. Emails were circulated right after the meeting effective immediately. The only time the employees had was to complete the last formalities.
The co-founder said that the company was on a hiring spree previously in a hope to close the funding rounds. Sadly it did not materialize and hence they had to do this retrenchment in order to survive the crises.
The same event took place last year in July when they fired about 80 employees, as a part of cost-cutting measures.
An employee told that the company might also pull back its properties from some of the cities and return them to their owners. The company has about 450 properties across the country and about half of them are in loss.
OYO has become a tough competitor for many start-ups in real estate now. OYO is well established and backed up by Softbank’s. The firm recently raised $1 billion from Chinese ride-hailing firm Didi Chuxing, SoftBank, Singapore-based ride-hailing company Grab, and others.
IIT-Roorkee graduates Rahul Chaudhary, Sidharth Gupta, and Kadam Jeet Jain founded Treebo in March 2015. The firm last raised $34 million in August 2017, led by Hong Kong-based hedge funds Ward Ferry Management and Karst Peak Capital. So far the company has raised a total of $57 million.