Funding and layoffs
Why do some startups lay off people even when they know that they'll be raising money soon via new funding?
Case in point: Dunzo
Are these employees given severance? Or is it just that Hi, Hello, Today is your last day, thank you, bye that you see most startups do?
What are your thoughts on this?
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Thinking out loud: Cost cutting (in terms of workforce) might be a prerequisite of the funding deal
This is actually true. Before my company (not naming) raised next round in March, they had to lay off complete senior management. These people were bought in from high paying startups and given lucrative salaries. Wiped off, and not replaced
That became a pre req for lot of rounds since last year
Beheti ganga mai haath dhoona
At current scenario, No one knows how long this market recession going to continue. So all the companies tries to reduce the count to increase the run way. Because at the end of recession which ever company sustains and passes it, will grow big. It’s just a matter of time for them.
And When cost cutting comes into discussion, their first point will be layoff. They won’t think in reducing any other spend than the salary part. That’s how their mind are trained.
I'm also working in a well established startup and got layoff. They said that apply for resignation from portal and you have to serve 2 months of notice period and you'll get salary and don't have to work in office, just finish the ongoing tickets. And start searching new jobs.
I think they want to increase their profits so that they can easily get funding.
VCs themselves are in turmoil. Funding levels have gone back to 2019 levels. So not a great scenario for many people working in many startups ☹️
Because not everyone is a performer, its just before funding so this much of noise