SUMMARY
While a report said that FamPay fired 50 employees in the past few weeks, the fintech startup claimed that less than 10 people were sacked in restructuring drive
Head of engineering Shobhit Gupta, Brijesh Bhardwaj of product and growth vertical and design lead Fatema Raja quit FamPay in recent weeks
FamPay reported a loss of INR 50 Cr in FY22, while operating revenue stood at just INR 3 Cr
Trouble seems to be brewing for FamPay as the teen-focused fintech platform has reportedly laid off employees and is also in talks for an acquisition.
Sources told Entrackr that the startup has laid off as many as 50 employees in the past few weeks while many top-level executives have also quit.
FamPay’s head of engineering Shobhit Gupta, Brijesh Bhardwaj, who oversaw product and growth, and Fatema Raja, who led the design team, have quit the company, the report said. While Bhardwaj confirmed the development via a tweet, the other two executives still list FamPay as their current employer on LinkedIn.
The retrenchments were purportedly part of the fintech startup’s bid to slash costs and extend its runway.
FamPay founder Kush Taneja was not available to comment on the development. However, cofounder and chief executive officer (CEO) Sambhav Jain told the publication that the startup fired ‘less than 10 people across all levels’ on account of a team restructuring exercise.
Making matters worse seem to be FamPay’s failed attempts to raise funds amid the ongoing funding winter. While the sources were quoted as saying that the fintech player is also exploring merger and acquisition (M&A) opportunities, Jain denied it. He said the platform is not out in the market to raise money and never engaged with anyone for M&A.
The latest development comes months after a report by The Morning Context said that the platform was in the market to raise funds since mid-2022 and had failed to find any backers. Citing sources, the report also flagged investor concerns around high cash burn and mounting losses.
The startup has purportedly also been marred by regulatory hurdles which have put many of its expansion plans in cold freeze. The glaring issue, however, appears to be mounting losses which have put a spanner in the works for the fintech startup.
In the financial year 2021-22 (FY22), FamPay saw its loss widen to INR 50 Cr from INR 43..3 Cr reported in the previous fiscal. The fintech company posted a meagre INR 3 Cr in operating revenue in the year ended March 2022.
Founded in 2019 by IIT Roorkee alumni Kush Taneja and Sambhav Jain, FamPay is a fintech platform which offers a slew of offerings dedicated largely to teenagers. The flagship product of the company is its digital wallets that can be operated by both parents and kids. While parents can directly load the wallet with money, students can also avail basic banking facilities like payments and other transactions through the FamPay app.
The startup last raised a mammoth $38 Mn funding in June 2021, still considered one of the largest Series A fundraisers in the country. The funding was raised at a time when the Indian startup ecosystem was flush with funds.
However, it has been a downhill ride since then. 2022 saw funding numbers plummet 48% year-on-year (YoY) to $25 Bn from $42 Bn in 2021. This was largely the result of tightening monetary policies across the globe and worsening macroeconomic pressures which made investors wary of funding startups.
This has supposedly rubbed off on FamPay as well which has joined a growing list of Indian startups that have conducted layoffs amid concerns over profitability. Homegrown startups have collectively sacked more than 25,000 employees since January 2022.
On the other hand, fintech startups continued to steal the show in Q1 2023 as they raised the highest amount of funding at $1.28 Bn, accounting for nearly half of the total $3 Bn funding raised during the period.
