In another case of cash crunch in startups, Housejoy, an online home-services provider has reportedly given the pink slips to over 40 employees across departments.
According to an Economic Times report, the laying off at the Amazon-backed startup was in order to cut down on spiraling cost structures amid slow revenue growth. Most of those who have been asked to leave are reportedly at the mid-management levels across digital marketing, technical and back-end operations teams.
An employee told ET that Housejoy is looking to change its model to that of a marketplace while cutting down its exposure to categories with high operational costs.
As part of that, it is in the process of cutting down or shutting down categories such as specialized lifestyle and health services, which according to ET, bring in little or no unit margins.
The focus, therefore, will now be on high-demand categories such as beauty and some home services such as handyman services. These service-based offerings bring in better margins with lesser customer acquisition costs.
This will help cut down operational expenses, which in FY17 stood at nearly Rs 8 crore a month as against its monthly revenue of Rs 2 crore only.
There were earlier reports of Housejoy being bought by OLX, Quikr and also UrbanClap. The beauty and home services segments have seen several acquisitions in the past year of two, especially with Quikr acquiring several such smaller startups.
Housejoy, which has so far raised about Rs 180 crore, last received funding in December 2015 when it raised $23 million from Amazon, Matrix Partners India, Vertex Ventures and others.
It competes with players such as UrbanClap, which offers nearly 40 services across Delhi NCR, Mumbai, Hyderabad, Chennai, Ahmedabad, Bengaluru and Kolkata and has raised around Rs 400 crore so far. UrbanClap is also looking to now enter Dubai after having raised funds from Dubai-based Vy Investor.