Meesho Layoffs: SoftBank-Backed Unicorn Fires 150 Employees After Raising $870 Mn In 2021

Ecommerce unicorn Meesho has laid off 150 full-time employees in a restructuring of its Meesho Superstore grocery delivery service as it scales back after expanding in the pandemic grocery rush. The layoffs at Meesho come less than seven months after its massive $570 Mn fundraise in September 2021.

In a post on its blog about the layoffs and restructuring, Meesho said, “As we look to boost efficiencies in the light of the integration, a small number of full-time roles and certain third-party positions on six-month contracts at Meesho Superstore were reassessed to remove redundancies with the core business.”

In a further statement, a company spokesperson revealed, “About 150 full time employees will be impacted by the restructuring of Meesho Superstore which is aimed at bringing in efficiencies. The company is offering severance packages and outplacement assistance to help those impacted secure new opportunities outside the company.”

The blog adds, “The redundancies do not impact any positions at the core Meesho marketplace business, where we continue to hire and grow talent.”

It also goes on to be bullish about its expansion with the leaner team, “As we continue to scale our efforts to make online grocery affordable for users across Tier 2+ markets, these changes will ensure we have the right framework in place to meet the growing needs of our customers.”

Meesho: From Two Fundraises In 2021 To Layoffs

Founded in 2015 by IIT-Delhi alumni Vidit Aatrey and Sanjeev Barnwal, Meesho last raised funds in September 2021, following a round in April that year as well. In all, it raised $870 Mn across both these rounds. While it entered the unicorn club with the April funding round at a valuation of 2.1, it subsequently raised money at over 2x the valuation.

Meesho is currently valued at $4.9 Bn. The Y Combinator-backed startup had claimed in September that has over 13 Mn individual entrepreneurs on its platform and is catering to 45 Mn customers. Besides YC, it has raised funds from Softbank, Prosus Ventures, Meta, Shunwei Capital, Venture Highway Knollwood Investment, Fidelity Management and B Capital Group. Its other investors include Footpath Ventures, Trifecta Capital, Good Capital.

Meesho saw a 158% rise in revenue from sales in FY2021, but its expenses almost doubled and its losses shot up to INR 498.6 Cr in FY21, 62.5% jump from INR 306.6 Cr it saw in FY20. With INR 1,337.3 Cr in expenses and INR 792.8 Cr in revenue, Meesho spent INR 1 to earn INR 0.59 paise in the year ended March 2021.

From Grocery Expansion To Downsizing

After that September 2021 funding round, Meesho had claimed that its aim was to reach 100 Mn monthly transacting users by December 2022 and the funds will be used to grow the technology and product teams by 2.5x and increase its marketplace to 50 Mn+ products.

Incidentally, Meesho had also claimed said it would be expanding its groceries and FMCG offerings to 200+ cities. But now, this plan seems to have changed, as pointed out by the company in its blog.

Last week, the company said it will integrate its grocery business within the core application by the first week of May. Though it did not mention whether this would include a further pivot to dark store-led deliveries as has become the norm for all grocery players in 2022.

As the company pointed out on its blog, Superstore began as a pilot in Karnataka less than nine months ago, but it has spent considerably, given that it was entering the relatively unorganised Tier 2+ markets. It claims to have expanded to Maharashtra, Telangana, Andhra Pradesh, Gujarat and Madhya Pradesh and has plans to be in 12 states by the end of 2022, despite the cutbacks in its team.