Udaan, backed by Tencent and Lightspeed Ventures, fires 160-180 employees as it 'refines its cost structure'

B2B e-commerce platform Udaan has laid off 160-180 employees or 4-5 percent of its 4,000-strong workforce.

The company has attributed the layoffs to its "efficiency enhancement exercise", which has resulted in redundancies, with some roles no longer required.

"We have taken various steps to enhance efficiency, refine our cost structure and grow faster in our journey to achieve strong unit economics," the company's spokesperson told CNBC-TV18. Incidentally, the layoffs come within two weeks of the Udaan CEO Vaibhav Gupta telling employees in an internal note that the business could possibly achieve positive unit economics by the end of June.

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However, as part of the long-term plans, the unicorn B2B startup will continue to hire talent for 'the new roles that have been created to grow the business faster'.

The B2B platform's previous round of retrenchments had come on the back of disruptions during the pandemic when it let go at least 1,000 employees after losing nearly 60 percent of its business. Some media reports had pegged the number above 3,000.

Udaan has now joined the league of India's unicorn startups — CARS24, Meesho, Unacademy, Vedantu, Pharmeasy, Eruditus, MPL, Blinkit, BYJU's (White Hat Jr.), and Ola — that have either cut jobs or witnessed mass resignations in 2022.

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Since the beginning of this year, Indian startups have laid off over 10,000 employees with edtech companies retrenching the most in search of a longer capital runway. Among e-commerce startups, Udaan joins the likes of Meesho, CityMall, Trell, Blinkit, and Yojak in firing employees.

Venture capital firms have begun to pull away from fresh funding rounds amid global economic uncertainties and, tech rout, which has seen several VC funds suffer a massive drop in their holdings.

Backed by Lightspeed Ventures, Tencent, and DST Global, Udaan turned unicorn, or a startup valued at $1 billion and more, in 2018. Its next significant funding round came at the height of the pandemic in early 2021, with the B2B e-commerce platform raising $280 million at a valuation of $3 billion. In CY21 alone, the unicorn raised over $500 million from investors.

Earlier this year, Udaan raised a total of $250 million through convertible notes and debt funding, which saw Microsoft joining as an investor. At the time, the company said it had "invested more than Rs 4,000 crore in the past 12-18 months across different pillars of business..."

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A convertible note is an instrument typically used by companies at the pre-IPO stage and it converts into equity at the time of IPO. Large-scale tech companies that have successfully used convertible notes include Airbnb, Uber, Spotify, Robinhood, and others.

In September 2021, Udaan rejigged its top management and appointed co-founder Vaibhav Gupta as its chief executive officer to help steer the company in a bid to create a "future-ready organization" in time for its IPO in 18-24 months.

Until then, Udaan’s founders had steadfastly refused to appoint a CEO, citing their close links back at online retailer Flipkart, the camaraderie they shared, and the power of decentralised control, according to a Moneycontrol report.

Founded by former Flipkart executives Vaibhav Gupta, Amod Malviya, and Sujeet Kumar in 2016, Udaan is a business-to-business e-commerce platform, operating across categories, from lifestyle and electronics to staples, fruits, and vegetables.

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Udaan enables over 3 million retailers and 30,000 sellers on the platform to trade products on its platform. Focused on B2B trade, the platform also offers supply chain and logistics support with daily deliveries across more than 1,000 cities through its offering — udaanExpress.

In addition, Udaan enables financial products and services to small businesses, manufacturers, and retailers through its financing arm — udaanCapital.

More than a third of sales on its B2B commerce platform is powered by udaanCapital, the firm said previously. It claims to facilitate credit worth over Rs 8,000 crore every year to more than 150,000 kiranas and small businesses.