The start-up woes seem to follow Amazon-funded start-up Housejoy. The company will lay-off about forty people, according to newspaper reports. Under competitive pressure, the Bengaluru-based startup has decided to shut down those verticals which fetch low-profit margins such as specialised lifestyle and health services.
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Housejoy, which provides various at home services, is going to reduce its exposure to operationally-intensive categories and is looking to turn the platform to a marketplace model, the report said.
The company, which operates in the hyperlocal market, raised $22.5 million in series B funding in December 2015, led by Amazon and new investors including Vertex Ventures, Qualcomm and Ru-Net Technology Partners. It has raised a total of $27 million so far.
Competition has been harsh in the hyperlocal segment, as an estimated 400 startups entering the market between 2011 and 2016. Out of these, about 193 were funded and raised more than $1 billion funding in total. More than hundred shut down.
Though Housejoy survived this phase, it rolled back services from seven cities. Reports also indicated that the company was planning to halve its workforce and would focus on five cities – Delhi, Mumbai, Chennai, Bengaluru, and Hyderabad.
Start-ups across segments including Amazon, Snapdeal as well as unicorns are laying off people, as employees are the largest fixed costs for a startup.