OkCredit, which is backed by marquee investors including Tiger Global and Lightspeed, has laid off around 40 employees, a person close to the development told VCCircle, as the fintech startup struggles to monetise its business.
An OkCredit spokesperson confirmed the layoffs but did not divulge the number of employees who were let go.
The company's current staff strength stands at 100 and the layoffs were effected by change in the company's priorities as it is in a growing phase, the spokesperson said in a statement.
"Going ahead we will be focusing on fintech initiatives and on strengthening our growth channels alongside digital, in our mission to help small and medium businesses grow their business in India," the spokesperson added.
OkCredit, operated by Psi Phi Global Solutions Pvt. Ltd, connects small business owners, suppliers and customers, and enables them to record credit and payment transactions.
The spokesperson said that as part of the company's change in priorities, it will also hire talent with the relevant skill sets.
The company has ensured that the laid off employees are supported by outplacement services, extended medical insurance to make their transition into their new careers as seamless as possible, it added.
OkCredit has raised significant venture capital money over the years. The startup raised $67 million in its Series B round of funding led by Tiger Global and Lightspeed in September 2019. The same year it raised $15.5 million in a Series A funding from Tiger Global and other investors. Prior to that, it had raised seed money from Lightspeed in 2018.
The spokesperson said that the company has a comfortable runway to scale its fintech initiatives and for its growth, capital is not a constraint. "Fund raise is not an urgent priority for us," the spokesperson added.
However, the startup has been struggling to monetise its business.
Its total income was at Rs 5.8 crore in FY21 and net sales was almost nil, according to VCCEdge, the intelligence platform of VCCircle. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) loss expanded to Rs 107 crore in FY21 versus Rs 155.7 crore in FY20.
The spokesperson noted that revenue is a top priority for the company and it is working out innovative solutions to monetize its user base.
"Over the last year, we've been building new products at OkCredit and they are showing good results. Hence, we are sharpening our focus on Fintech initiatives and strengthening alternate growth channels, along with digital marketing," the spokesperson added.
In 2020, there was a report that OkCredit was in merger and acquisition talks with other venture capital-backed companies including its rival Khatabook. OkCredit co-founder and CEO Harsh Pokharna, had denied the report then.