The SaaS startup is in hot water for failing to achieve a product-market fit after several pivots. Sequoia Capital-backed software-as-a-service (SaaS) startup Lummo is mulling getting acquired or closing its operations, multiple sources aware of the matter told Moneycontrol.
“They had about four pivots over the span of four years since when the company was operational. Every year, they try something new, it doesn’t stick, so they go ahead and scrap it,” said a source aware of the operations, requesting anonymity.
Another source said the company had assured its staff that it has a runway for the next five years, hinting at low exposure from the perils of the funding winter.
In January 2022, the startup, formerly known as BukuKas, raised $80 million in a Series C funding round led by Tiger Global and Sequoia Capital India, with participation from Amazon founder, Jeff Bezos. To date, Lummo has raised about $140 million across three funding rounds.
However, if the company decides to shut down, it will return the remaining funds in its bank to the investors, multiple sources added.
“…Lummo remains extremely well capitalised and they undertake adjustments in their business from time to time as they refine their financial and strategic direction along with the restructuring of internal resources to keep pace with the same,” said a company spokesperson, in response to Moneycontrol’s queries.
Sources close to the company said while the above measures are in consideration, Lummo might also decide on investing more into its product and make another attempt to sail through the difficult phase.
Founded in December 2019 by Krishnan Menon and Lorenzo Peracchione as BukuKas, a book-keeping app for small and medium businesses, the company later launched Tokko, an online direct-to-consumer commerce builder, in 2020. It, then, rebranded Tokko as LummoShop.
Back in May, the company had reportedly discontinued LummoShop, pivoting from the model. However, the SaaS startup denied the development.
According to people in the know, around the same time, Lummo was considering a move into fintech and hired talent accordingly. Those employees were later let go as the pivot was scrapped, they added.
In May last year, sources said about 50-60 employees, mostly with engineering and product roles, were let go from the India team after 100-120 employees were terminated from the Jakarta office.
According to former employees, the company has to date conducted three rounds of layoffs – the first in May, a silent round in October to November, and another one that happened at the end of March, as the management deliberated over measures to save the struggling firm.
“After the first round of layoffs, we were down to 250-300 people, then we dropped to approximately 120-150 in November,” said a former employee quoted above, who was let go in November.
“I was laid off in November 2022. They told me back in May that we are doing one-off layoffs and won’t do it again but still, they did it without a good reason,” said one of the employees impacted during the second round.
Back then, the company had cited bad market conditions as the reason behind reducing its team members, he said. “It was all of a sudden, I logged in the morning and was asked to join a meeting with the India lead instead of my standup and after that, all access was gone,” the employee added.
According to sources, in the latest round in March, employees from both India and Jakarta teams have been let go again and await their due payments.
We, however, could not ascertain the number of employees let go in this round, and how many continue working at the company hereafter
