CEO

Startups rope in new CEOs amid cash crunch, layoffs, profitability and IPO plans

CEO

Management rejig and layoffs at several prominent startups have continued to make headlines this year. For layoffs, startups have cited a familiar reason i.e. redundancies, efficiencies as well as getting a step closer to profitability. As far as management changes go, reasons and circumstances vary. For instance, DealShare’s CEO position was vacant for a long time. These changes, however, also bring a fresh wave of optimism in the ecosystem, which has of late faced a host of challenges, ranging from funding crunch to stringent regulatory actions.

Data compiled by TheKredible shows that this year more than 10 Indian startups have appointed, elevated or are on the verge of naming their new chief executive officers (CEOs). The list includes the likes of DealShare, MyGate, Inshorts, Cult.fit, Third Wave Coffee, Byju’s, Ola, PhonePe, and Setu, among others. Interestingly, half of them have been elevated to the role of chief executive whereas some founders took charge as the operational leaders after the exit of the existing CEO.

[Elevated CEOs]

The year 2024 started with a new trend of appointing new CEOs and e-commerce platform DealShare was first when they elevated Kamaldeep Singh as the new chief executive of the company from being the president of their retail business. The firm faced several challenges during the second half of 2023 as its three co-founders left the firm in a short span of time and it also had to shut down its B2B vertical after a flat growth in FY23 with rise in losses.

Community management app MyGate, news aggregator InShorts and fitness tech firm Cult.fit also elevated Abhishek Kumar, Deepit Purkayastha and Naresh Krishnaswamy, respectively, as their new chief executive officers. All previous CEOs of these three companies namely Vijay Arisetty, Azhar Iqubal and Mukesh Bansal have now taken the role of chairman. Iqubal recently joined Shark Tank India season III as a judge. Also, InShorts is pivoting from news aggregation to influencer led platform which could be the reason behind this reshuffle in leadership.

Cult.fit also faced challenges early this year as it fired more than 150 employees. As per the company, it reduced some redundant positions with the aim of streamlining operations.

Meanwhile, fintech unicorn BharatPe finalized Nalin Negi as its full time CEO. Negi, the former chief financial officer of the company, had been working as interim CEO since January last year.

Freshworks also went through a reshuffle as the firm’s founder Girish Mathrubootham stepped down from the position of CEO after 14 years. Mathrubootham has transitioned into the role of executive chairman while the company’s president Dennis Woodside has been elevated as the new CEO. Freshworks went public in September 2021.

It’s important to note that most of these companies in this list had losses until FY23. Though, a few of them managed to control losses during the fiscal year.

For context, DealShare’s GMV remained flat but its losses jumped 14% to Rs 502 crore in FY23. InShorts posted flat scale with 33.6% jump in losses to Rs 310 crore in FY23. MyGate, Cult.fit and BharatPe also managed to control its losses. 

[New CEOs appointed in 2024]

In January, PhonePe announced the appointment of Ritesh Pai as CEO of its International Payments business while Infibeam Avenues announced the appointment of Rajesh Kumar SA as CEO of its AI business venture Phronetic.AI. These appointments appeared to be a positive sign for both companies which are expanding their businesses.

Third Wave Coffee’s co-founder and CEO Sushant Goel stepped down as the firm’s chief executive role and transitioned to a board member in March this year. The WestBridge-backed company named KFC India and Nepal CEO Rajat Luthra as Goel’s replacement. Before the exit of Goel, Third Wave Coffee also went through layoffs, firing more than 100 employees.

In April, Aakash Educational Services, owned by edtech company Byju’s, appointed Deepak Mehrotra as its new managing director and chief executive officer. Mehrotra joined Aakash after the exit of its chief executive Abhishek Maheshwari. Recently, the firm raised money from Manipal Group’s Ranjan Pai to clear the debt raised from Davidson Kempner in May last year. Aakash has plans for a public listing this year.

Last month, API infrastructure company Setu, owned by Pine Labs, named Anand Raisinghani as new CEO of the company. Raisinghani will succeed Sahil Kini, who is the erstwhile chief executive of Setu.

Earlier this month, Paytm Money’s CEO Varun Sridhar also quit the position and Rakesh Singh has been appointed as the new chief executive of the stock trading platform. Before joining Paytm Money, Singh was the CEO of fintech company Fisdom. On Monday, Adda247 appointed Bimaljeet Singh as its chief executive for skilling and higher education business. Like several edtech firms, Adda247 also went through layoffs in the last quarter of 2023.

It’s worth noting that Paytm Money and Phronetic.AI are owned by public companies One97 Communications and Infibeam, respectively.

In terms of financial performance, Aakash reported profit in FY22 and expected to replicate same growth in FY23.

Pine Labs reported more than Rs 1,600 crore revenue with control in its losses to Rs 227 crore in FY23. Third Wave Coffee reported a three fold jump in its revenue with same growth in  losses to Rs 54 crore in FY23. During FY23, PhonePe as a group posted revenue of Rs 2,914 crore and Rs 1,755 crore loss. During the period, Adda247 reported Rs 115 crore revenue and Rs 110 crore loss.

[Founders, executives took the charge after CEOs exit]

Last month, Arjun Mohan, the CEO of Byju’s India operations, stepped down from his position seven months after joining the edtech firm. After his exit, the company’s founder Byju Raveendran returned as the operational leader to see day-to-day functioning. During the process, Byju’s also sacked more than 500 employees.

It’s worth highlighting that Byju’s has been facing a cash crunch for a long time and failed to pay the salary of its employees on time.

Recently, Ola Cabs’ CEO Hemant Bakshi left the firm after three months of joining. His departure came at a time when Ola is gearing up for an initial public offering (IPO). The company also fired 10% of its total workforce.

In the interim, Ola founder Bhavish Aggarwal will oversee operations until a new executive is appointed.

In January, Indus Appstore’s CEO Rakesh Deshmukh announced quitting the firm. Since then, the firm has been led by ⁠its CPO and co-founder Akash Dongre, and CBO Priya Meenakshi Narasimhan. The firm is yet to announce the name of the official CEO.

As per a media report, Beardo’s CEO has gone on a year-long sabbatical from April this year. During his absence, CBO Siddharth Vaya, and Koteshwar LN, head of digital first business, are expected to lead the company. Beardo was acquired by Marico Group in June 2020.

In the ongoing calendar year, Sukhleen Aneja, CEO of The Good Glamm D2C vertical and Subramanyam Reddy, CEO of upGrad’s Knowledgehut also announced their departure from the company. While Knowledgehut is yet to name the new CEO, The Good Glamm has decided not to appoint a new CEO for the D2C vertical. As per reports. Ketan Bhatia and Ankita Bhardwaj will lead the brand’s business operations.

Last month, The Good Glamm Group resorted to layoffs and went through top level restructuring as it is gearing up for public listing.

More recently, Paytm Payments Bank’s CEO and MD Surinder Chawla decided to hang up his boots. He will be relieved from his positions on June 26 while the firm is yet to announce his replacement.

Public company Paytm laid off more than 1,000 employees in December 2023 in a cost cutting effort. As per reports, the firm also went through layoffs amid back to back departures of top level executives and the recent diktat by RBI. However, Paytm denied any fresh layoffs at the company.

When it comes to financial performance, Byju’s and Ola are in deep losses and Beardo slipped into the red in FY23. Edtech unicorn upGrad reported close to Rs 1,200 crore revenue in FY23 with Rs 558 crore loss in FY23. Good Glamm Group is yet to file its annual financial report for FY23.

[Conclusion]

For those who have sniped at CEO salaries at startups, the last year should be a good indication of just why salaries refuse to moderate. Besides the high turnover, it is no secret that many investors and even founders have considered CEO’s as a horses for courses option, taking in people with specific skill sets when they were relevant for the organisation. Thus, be it fundraising, cost cutting, or all out for growth mindset, we have seen how different CEO’s bring their own competencies, which, unfortunately, have a use by date in most cases. Many of course can simply struggle to adapt to the startup culture and the unstructured challenges it throws up, which can be the worst outcome for a startup with little achieved during their tenures.

Perhaps the toughest ask of a startup CEO is what she is expected to do in what seems like compressed time to most, making it most challenging to attract quality personnel at times. That is also one reason why we see investors take over the job of bringing in the CEO when they feel a founder needs to move on to a more strategic role or simply take a break from the intense pressure. Don’t expect the CEO churn to slow down anytime soon for these reasons.  

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