Exclusive: Treebo lays off over 120 employees as it focuses on profitability

Driven by funding crunch and mindless hiring, startups across several sectors have been executing mass layoffs. Venture capital-backed startups including Cars24, Rubique and UrbanLadder collectively had laid off over 650 employees.

Joining the league of these companies, budget accommodation hotel chain Treebo has fired over 120 employees in the past few weeks. “About 60 employees who have been driving Treebo’s operations across many cities have been laid off since June,” said over half a dozen sources including several employees.

According to sources who didn’t wish to be identified, close to 50-55 employees have been asked to resign from corporate sales (B2B), quality, and business development functions as Treebo has been controlling its burn rate. “The firm has been trying to raise funds from quite some time. However, it looks like the fundraising plan is far from materialising, since it’s resorting to a mass firing,” added sources.

Sources requested anonymity as revelations of identity can hamper their relation with the company. According to LinkedIn, the company has about 900 employees. This essentially means that Treebo has fired about 15% of its overall strength.

The mass layoffs has come on the back of media reports outlining that Treebo was in conversation with Fabhotels for a potential merger. The company was also said to be in advanced talks with the world's second-largest hotel chain Accor SA for raising $50 million worth round.

While we don’t know whether the round from Accor SA is happening or not, layoffs put emphasis that the company is going through the funding crunch. “Since Treebo is facing trouble in raising follow-on funding, it has been focusing on profitability not growth for the past two-three months,” added sources.

Entrackr reached out to Treebo's founders Siddharth Gupta and Rahul Chaudhary. However, they declined to comment.

So far, Treebo has raised about $55 million total in risk capital from Ward Ferry Management, Karst Peak Capital, SAIF Partners, Bertelsmann India Investments, and Matrix Partners. 

Budget hotel landscape has changed a lot in the past 2-3 years. Largely because of staggering fundraise and global expansion by OYO. Treebo and Fabhotels must be finding it tough to raise fresh rounds as their common rival is deep-pocketed and backed by formidable force - SoftBank.

Nevertheless, India is a very large market and still, 80% of the overall budget accommodation in India is unorganised. There is enough space for multiple players. However, strong financial back-up is required to stay afloat in a game where SoftBank has set a hawk eye. Going forward, it would be interesting to observe how Treebo and Fabhotels onboard new and convince existing investors for follow-on rounds.