These "Start-ups" are Reducing Cash Burn to Target Profitability
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After being in the cash-burn mode for years, a few ‘start-ups’ are finally focusing on their core model and targeting profits for many reasons including market listing and investor caution. The move has become stronger after real estate firm WeWork’s initial public offering (IPO) fell through pushing Indian late-stage investors to focus on making money.
The New York-based firm failed to put up a definitive path to profitability due to which Masayoshi Son-led Softbank incurred major losses. The Japanese investor suffered $6.5 billion in operating losses from investments in cash-burning businesses including WeWork, and cab-hailing service Uber Technologies Inc., according to multiple media reports.
Here are a few start-ups who are prioritising profitability:
India’s poster boy for e-commerce, Flipkart, is gearing up for an IPO in the US by 2022. The Walmart-owned giant is focusing on achieving profitability and strengthening compliances as it would not want to repeat WeWork’s mistake or receive a tepid response like Uber Technologies Inc. after its listing. For getting listed, the company needs to show its path to profitability. To increase profits, the company will focus on pushing private label and reducing cash burn, according to a Mint report. Online ticket booking platform MakeMyTrip and Yatra are among a few companies already listed in the US.
The Gurugram-based food delivery cum restaurant listing platform let go of about 540 employees across its customer, merchant and delivery partner support team, in September, according to a Mint story. The company did so to increase efficiency. This move came only a month after Zomato had already fired 60 employees on grounds of roles becoming redundant. Apart from Zomato, surface transport company Rivigo laid off around 100 employees, with Quikr, Oyo Rooms, and Paytm laying off at least 500 employees in 2019.