Neobanking platform Open has given pink slips to around 50 employees, three sources aware of the development told Entrackr. With this, Open joins several fintech companies that have resorted to layoffs at a time when funding has slowed down.
“Close to 50 employees have been fired as the company is looking to cut costs and extend the runway in the current market conditions,” said one of the sources requesting anonymity. “Open’s founders also took a 50% cut in their salaries.”
Open confirmed the developments — on layoff and founders taking a pay cut — to Entrackr but added that they have let go 47 employees. “While 47 Openers were exited based on performance, the company is actively recruiting for critical functions such as growth marketing, product, and sales functions to continue growing the business and better serve its customers,” said Anish Achuthan, Open’s co-founder & CEO in a statement.
In May last year, Open became the 100th unicorn from India after raising $50 million in its Series D round led by India Infoline (IIFL) with participation from existing investors Temasek, Tiger Global, and 3one4 Capital. The Google-backed company was expected to raise more funds in the last round but it settled with $50 million given the tough market conditions.
As per sources, the company hasn’t given a severance package, but only one month’s notice period worth of payment. “No notice or information, affected people are called into a meeting room and given pink slip, post which they’re not allowed to get back to the office and are directly escorted to the ground floor or car park,” said an employee who was impacted by the layoff.
“Our recent staffing changes were driven solely by performance evaluations, and some support functions were outsourced to manage growth and scale. We are actively hiring across critical functions such as growth marketing, product, and sales,” said Achuthan.
Open did not comment or clarify on severance pay. However, the company said that has also ensured deserving high performers get 20%-30% average hikes and ESOPs to build the company for the long term.
The six-year-old company managed to post significant revenue in FY22 but didn’t cross the Rs 50 crore revenue mark. Its operating collection stood at Rs 40.9 crore in FY22 as compared to Rs 5.7 crore in FY21, according to Open’s annual financial statement with the Registrar of Companies (RoC). The firm’s losses also widened to Rs 167 crore from Rs 65.6 crore during the period.
“As a part of scale up and profitability OPEN will continue the efforts to make a highly performance oriented effective organization fit for scale and is one of the very few start-ups with visibility on profitability and runway above 30 months to well face the market conditions,” added Achuthan.
Neo banking platforms in India have struggled to make money despite raising millions of dollars during the 2020-2022 period. Like Open, Stashfin, Fi and Jupiter also couldn’t go past Rs 50 crore mark in revenue in the fiscal year ending March 2022.
Update: The story has been updated to include the company’s statement.