Twitter-rival Koo lays off 30% of employees: Here's why
What's the story
Tech companies around the world are now chasing efficiency. Twitter-rival Koo is in the same boat. The company has laid off around a third of its employees in recent months amid funding struggles, reported Bloomberg. The microblogging platform was the biggest beneficiary of Twitter's spat with the Indian government. It is, however, struggling now.
Context
Why does this story matter?
The tech sector is going through one of its worst periods. Companies are yet to figure out a way to end their post-pandemic misery. The current global economic climate is taking no prisoners. From tech giants to start-ups, everyone is looking for a way to stay afloat. Streamlining operations by firing employees has become the go-to tactic of companies to deal with the crunch.
Layoff
Koo has been struggling to raise funds
Koo has fired 30% of its about 260-strong workforce in the past few months. In September last year, the company had axed 15 employees. The new round of layoffs is a result of the company's inability to raise funds. The microblogging platform has also been struggling with losses. The company, founded by Aprameya Radhakrishna and Mayank Bidawatka, is backed by Tiger Global.
Funding crunch
Start-up funding fell 75% year-over-year last quarter
Start-ups around the world are wrestling with the funding crunch. The fear of a looming recession has made investors unwilling to spend their money. In the January-March quarter, start-up funding in India declined by 75% year-over-year. Late-stage start-ups like Koo have been the worst hit by the depressed investment activity. Late-stage funding fell by 79% year-over-year in the last quarter.
Losses
Koo recorded a loss of Rs. 197 crore in FY22
In FY22, Koo reported operating revenue of Rs. 13.9 lakh. The company's total income in FY22 was Rs. 4.88 crore. Meanwhile, its losses ballooned 5.6 times to Rs. 197.15 crore. During FY22, the company's expenses soared eight times to Rs. 202.03 crore. From July 2022 to January 2023, the social media platform's monthly active users fell from 9.4 million to 4.1 million.
Information
The focus is on efficiency now: Koo
The "global sentiment right now is more focused on efficiency than growth and businesses need to work toward proving unit economics", a company spokesperson told Bloomberg. Co-founder Bidawatka said Koo is still "well-capitalized" and is striving to become profitable.