Kirana tech startup 1K Kirana Bazaar has laid off around 40 percent of its workforce as it restructures its business and winds up operations in a few geographies.
Co-founder Kumar Sangeetesh, in a statement to Moneycontrol’s queries, said, “We are currently in the process of restructuring as our growth forecasts have changed. We are changing our focus areas and moving out of a few geographies. Due to this, we have to let go of 40 percent of our employees.” DealStreetAsia reported the layoffs first.
However, multiple sources privy to the matter told Moneycontrol that the number was at least over 60 percent of the workforce, or at least 600 employees.
According to sources, the startup was struggling to raise fresh funding due to investors' increased focus on profitability and financial metrics, which resulted in this situation.
The layoffs affected the on-ground operations, warehouse, delivery, network operations, growth, and tech teams, according to sources. They added that the startup had over 1,000 employees following the last funding round in May 2022, but there are now only about 200 employees across teams.
“It is way more than 40 percent. It has to be around 60 percent or even more given that the company has retained only around 200 employees now. Over 600-700 employees were laid off,” said a source in the know, seeking anonymity.
The company began terminating its staff in November last year, with the latest layoffs happening at the end of March, said sources quoted above.
“I just got a call one evening from my manager informing me that I got laid off. The company was offering one month’s salary as severance package if I resigned myself. I got that salary but didn’t get any of my travel allowances or even pending leaves settlement. Though they approved my reimbursement claim, I am yet to get my full and final settlement,” said one of the employees who got laid off, seeking anonymity.
The employee added that all of this communication happened verbally and he did not receive an email on this from HR even after asking for it.
“I got a one-line email that said I need not go to work from next day onwards. I got 15 days' salary in severance pay,” said a second employee.
Remaining tech teams were asked to take a 40 percent pay cut last week, after which the teams went on a one-day strike, sources said.
Responding to this, Sangeetesh said, “Company followed the standard operating procedure. HR was involved and they helped the managers to communicate. Severance package and the full and final settlement are subject to company policies.”
Founded in 2018 by Sangeetesh and Sachin Sharma, 1K Kirana’s business model involves tying up with offline kirana shops and organising them by providing its own branding and online access. The startup also managed sourcing and distribution of goods selling at these shops, cutting off middlemen, in turn improving margins for kirana merchants.
According to one of the employees, 1K Kirana also took care of the rent and electricity bills of these shops which added to its expenses. The startup operates over 1,000 stores across Rajasthan, Punjab, Uttar Pradesh, Uttarakhand, Gurugram and Delhi.
Overspending and funding delays
1K Kirana Bazar had last raised $25 million in a Series B round in May 2022 led by Alpha Wave Global, Info Edge Ventures and Kae Capital. It is also backed by prominent unicorn founders and angel investors.
All of the employees Moneycontrol spoke with confirmed the subsequent delay in raising fresh capital, as informed by their respective team leads, which resulted in the layoffs.
Sources believe that the Gurugram-based startup was burning a lot in its day-to-day cash heavy operations, which made investors uncomfortable.
“The company used to burn a lot. Take the example of conveyance reimbursements. Employees with a salary of Rs 30,000 are filing Rs 40,000 as reimbursement, this used to be a common practice,” said a third employee, who was let go last year, requesting anonymity.
“In a town hall back in December, the founder himself confronted employees blaming the accounts team, saying they should have been more careful in such instances,” the person added.
One of the earlier mentioned employees also said that the startup was investing much more on rents and other expenses to run each store than it was earning.
“If a store had a monthly business of Rs 100,000, the startup was making only about Rs 20,000-32,000 in profit. Of this, if it was also paying around Rs 10,000 in rent, Rs 2,000 in electricity and Rs 600 for WiFi at each store on a monthly basis, what’s left is very less,” the employee said.
“Series C funding was supposed to come in by October, but that didn’t happen. Doesn’t look like it will happen anytime soon, since they also laid off people from the tax teams too,” the employee added.