Revenue-based financing platform Velocity laid off around 14% of its workforce earlier this week, sources told Inc42.
The layoffs impacted employees from across verticals, the sources said. The Valar Ventures-backed startup is offering the impacted employees a two-month salary as severance pay.
Confirming the development, Abhiroop Medhekar, cofounder and CEO of Velocity, told Inc42 in a written statement, “Getting to profitability is an important priority for us and this restructuring is a crucial step in that direction. We’ve carefully restructured our organisation to avoid redundancies. We’ve also streamlined and automated key parts of our workflows, unlocking substantial efficiency gains.”
“While this process was not without its challenges, it allows us to set a strong foundation for sustainable future growth. We’ve therefore had to make the difficult decision of reducing our team size by 22 individuals, which accounts for less than 14% of our total headcount,” he added.
However, as per the sources Inc42 spoke to, the number of employees laid off could be well above 20% of Velocity’s workforce. Prior to the layoff, Velocity had a headcount of around 150-160 employees.
The sources attributed the layoffs to a cost-cutting exercise to increase the startup’s runway. However, Medhekar rejected this, saying most of the $20 Mn funding Velocity raised a couple of years ago remains untouched.
Velocity reported a standalone net loss of INR 7.9 Cr in FY22, a 32X jump from INR 24 Lakh in FY21. Total revenue rose 2.3X to INR 5 Cr from INR 2.2 Cr in FY21.
Founded in 2020 by Medhekar, Atul Khichariya, and Saurav Swaroop, Velocity offers revenue-based financing to Indian D2C and ecommerce platforms. Besides this, the startup also offers these businesses credit cards and payment solutions.
According to Medhekar, the startup has made over 1,500 deals to date. Apparel and fashion brands Off Duty, Sujatra, and The Ayurveda Co. are among the startups Velocity has financed this year.
Velocity raised $20 Mn in its Series A funding round from Peter Thiel’s Valar Ventures in 2021. Presight Capital, Utsav Somani’s iSeed, Maninder Gulati (OYO), Zac Prince (BlockFi) and Philippe De Mota (Hedosophia) also participated in the round. Before this, the startup bagged $10 Mn in its seed funding round.
Velocity competes with the likes of Recur Club, Klub, and GetVantage.
The ongoing funding winter amid macroeconomic headwinds has forced startups and global tech giants to resort to layoffs to cut costs. According to Inc42’s layoff tracker, Indian startups have laid off over 28,000 employees since last year.
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