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NEW DELHI: Sequoia-funded fintech startup Bright Money has laid off close to 100 people, which is about 50% of its workforce, according to a person aware of the development.
On 15 July, the company sent out termination mail to employees, two employees impacted from the move confirmed.
“On Thursday (July 14th), the company asked the employees to drop everything that they were working on and announced about their cost-cutting measures. Then the next day on Friday, they sent termination mails," the first person added. “This all happened within two days."
“Employees across product, tech and marketing were impacted. Many were too early in their careers," he said, adding employees had been assured that the company was doing well, but “the sudden development has just shaken everyone."
The termination, which was effective immediately, provided one month of severance pay. Mint has reviewed one of the termination mails which said the organisation needs to restructure “due to market circumstances."
“There has been a tech equities crash since April 2022 and expectations for tech companies have changed," as per the email.
Bright Money, which operates out of India and offers financial services to customers in the US, has been trying to raise a Series B round. The uncertain funding climate and pressure to show profitability are the reasons behind this move.
While responding to a Mint query, Avi Patchava, co-founder and CEO of Bright Money, said, “Yes, Bright has restructured. These figures shared below are very incorrect." He has not responded to the lay-off number yet.
Last year in September, Bright Money raised $31 million in series A from Sequoia Capital India, Falcon Edge Capital and Hummingbird Ventures. It was also part of the first cohort of Sequoia India’s Surge programme, and counts the likes of InMobi founders Naveen Tewari and Abhay Singhal; Cred’s Kunal Shah; Jupiter’s Jitendra Gupta; Ram Shriram of Sherpalo Ventures; and Ram Pandit as its angel investors.
Bright Money was founded by former InMobi executives and others - Avi Patchava, Varun Modi, Avinash Ramakanth, Amit Bendale, Petko Plachkov, and Alex Seyfert - having data science background.
In a conversation with Mint last month, Patchava claimed that the two-and-a-half-year-old company had been doing extremely well, with $12 million in annual revenues.
He had said Bright Money was regulated to offer all forms of financial products such as checking account, savings account, credit and investment products to the US customers. Currently, the company has two revenue lines – one was people paying $10 subscription a month for using the app and availing several services, and the second is credit.
“Credit is our main product," Patchava had told Mint. “Bright is probably the only company running the entire credit business out of India and having the India set up gives them a huge cost advantage over any neobank in the US."
It had also secured $50 million debt facility to lend to its customer base. “We own our loan book and earn from the interest. The loan book is growing very fast. The debt facility is to build our loan book in next six months."
The company – that claims to have around 1.2 lakh user base – spends about $40 on per customer acquisition. “These are paying customers," Patchava had said.
He had confirm last month that Bright Money was in talks to raise a new round in next few months “for building tech and marketing expense." Patchava had claimed, “We are building a team of data scientists based out of Bangalore."
Calendar 2022 has been brutal in terms of lay-offs at startups. In recent months, multiple startups across sectors have laid off employees. For instance: Vedantu laid off 424 of its employees, while Unacademy fired nearly 800 employees. Earlier this year, edtech startup Lido Learning asked over 1,200 of its employees to resign, saying that it was looking to wind down its operations amid a funding crunch.
Social commerce startup Meesho laid off 150 employees in May. In February, OkCredit, which is backed by Tiger Global and Lightspeed, laid off around 40 employees.
So far in 2022, over 8,000 startup employees have lost their jobs. Mint reported that startups may lay off another 5,000 employees over the next few quarters due to the rising pressure from investors to improve profitability and to increase focus on their core businesses