The Mumbai-based startup’s cofounder and chief executive Sachin Agrawal informed employees of the decision in a town hall at 10 am on Wednesday when ET reported on the funding round from existing investors led by Schroder Adveq, a Zurich-based private equity firm.
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In a statement to ET on the layoffs, Bizongo confirmed that it had parted ways with a “few of the employees, and it was a very difficult decision. We had to do so in order to drive sharper focus towards key business priorities as we continue to build a high-performance organisation.”
The money was raised at $20 million short of a unicorn-level valuation — $980 million — 63% higher compared with the previous round of funding in August 2022. Agrawal told employees that it was difficult to raise the funding round, not because of a ‘funding winter’ but because of the company’s recent performance, ET has learnt.
“He told us that the company needs to restructure itself to improve its performance and that is why some of us, unfortunately who no longer fit, have to part ways. The company has assured of one more month of salaries to those impacted,” one of the employees told ET.
Another employee said the company has been trying to stitch together a pivot away from unsecured financing to vendors on its platform and move towards raw materials sourcing, primarily steel and aluminium.
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“They have around Rs 1,500 crore of receivables, out of which Rs 400 crore has not been paid up for over 90 days. They are trying very hard to get this money back,” he added.The company disputed these figures, saying that all the numbers shared were factually incorrect. “We just completed a fundraise at a premium valuation and that’s the testament to the health of the business,” it said.
The layoffs have impacted employees across the sales, marketing, business and strategy functions, and across hierarchies, ET has learnt. The impacted employees were asked to resign voluntarily in the presence of leadership, sources told ET.
The remaining employees, about 280 of them, were asked to join another town hall in the evening of Wednesday, where Agrawal dwelt on the need to move on, keeping in mind changing priorities, the sources added.
Over the years, Bizongo has changed its focus on various segments of vendor digitisation, from packaging, textiles to contract manufacturing. It moved into unsecured financing for vendors registered on its platform in 2021. The Tiger Global-backed company, founded in 2015 by IIT graduates Agrawal, Aniket Deb and Ankit Tomar, offers software-based vendor management and supply-chain automation and financing.
The company aims to post a profit before tax in the fiscal year ending March 2024. Currently, it derives half its revenue by consolidating raw material and purchasing workflows for small and medium-sized vendors, and the other half by providing unsecured financing to the same vendors. It has partnerships with more than 40 banks and non-bank financial companies to arrange loans for the vendors.
The company now has 450-500 enterprise customers with 7,000-8,000 small and midsize enterprises (SME) vendors onboarded on its platform, compared with 175 customers and 2,500-3,000 vendors two years ago.
In FY23, Bizongo reported a gross merchandise value of $800 million, Agarwal had told ET. It generated about $7-8 million in positive cash flow in the period. Loss remained flat at around Rs 100 crore in FY21, FY22 and FY23. In FY24, net revenue is expected to see a moderate 25-30% growth as the company focuses on profitability, he said.
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