Startup Street: FreeCharge’s CEO Quits, Even As Mobikwik Scales Up
Mobikwik and Paytm seem ready to absorb techies laid off by Snapdeal and Stayzvilla.
A unicorn finds its way back to earth, as Snapdeal restructures its business. Its subsidiary FreeCharge sees a new man put in charge, even as competitor Mobikwik scales up operations. Bengaluru based homestay startup Stayzvilla will shut its doors to travellers at the end of this month. Here’s what went down on Startup Street this week...
Govind Rajan Resigns As FreeCharge’s CEO
Govind Rajan, the chief executive officer of mobile wallet startup FreeCharge resigned from his post on February 21, 2017 for reasons undisclosed by the company. The resignation came one day ahead of FreeCharge’s parent company Snapdeal announcing that it was restructuring operations and letting go of around 600 employees.
Operations at FreeCharge will now be overseen by Housing.com’s former chief executive officer Jason Kothari who joined Snapdeal as its chief strategy and investment officer in January 2017. Kothari moved away from the real estate website after it was acquired by PropTiger.com.
I am confident that FreeCharge will achieve still greater heights under its incredibly talented team and I look forward to facilitating the transition over the next few weeks.Govind Rajan, Outgoing CEO, FreeCharge
Kunal Bahl, chief executive officer of Snapdeal, wished “the very best” to Rajan, in a statement to the media. The e-wallet has grown tremendously under Rajan’s leadership, he acknowledged. Snapdeal acquired FreeCharge for $400 million in April 2015.
Mobikwik’s Invests Rs 300 Crore In Quest To Expand
Mobikwik, which competes with FreeCharge in the mobile payment wallet space, invested Rs 300 crore in its business in a bid to expand its base three-fold to 15 crore users within 2017.
The company is projecting a jump in gross merchandise value to $10 billion (Rs 66,638 crore) from the current $2 billion (Rs 13,328 crore), as a result of this investment.
The investment of Rs 300 crores will be deployed in loyalty initiatives, expanding our reach and network, and launching other financial services such as loans and investments on our platform.Upasana Taku, Co-Founder of MobiKwik
MobiKwik had recently announced that it is expanding offices to 13 cities and is looking to hire employees.
As a part of its expansion, Mobikwik also launched a ‘Superchash’ loyalty initiative which will offer points and rewards to users after each transaction. The feature is similar to Paytm’s initiative of offering a cash back on each transaction.
Homestay Startup, Stayzilla, Shuts Shop
Yogendra Vasupal, co-founder of Stayzilla announced the suspension of operations on February 23, 2017 due to a cash crunch caused by low return on investment. He said the company struggled to compete with the discounting based growth prevelant in the travel industry. “Forced to match prices, we could not even recoup what we put in, necessitating very large capital requirement simply to sustain growth,” Vasupal wrote on the website’s blog.
Additionally, India’s “macro trends” made it difficult for the startup to expand to a cost effective scale, he added.
The costs, both financial and opportunity costs, creep up on you over a period of time and gets rationalised as cost of doing business in India...I started treasuring GMV, room-nights and other ‘vanity’ metrics instead of the fundamentals of cash flow and working capital.Yogendra Vasupal, Co-Founder, Stayzilla
The founders are looking to “reboot” with a new business model, Vassal wrote.
The website has currently suspended all orders with check-in dates after February 28, 2017. Customers who have made such bookings will receive 100 percent cash back, Vasupal added.
The Bengaluru-based startup, backed by the likes of Matrix Partners and Nexus Ventures, had raised $34 million since it was founded in 2007, according to data cited by Crunchable.
Paytm Invites Laid Off Techies With Open Arms
In the aftermath of Snapdeal and Stayzilla’s restructuring efforts, Paytm’s Vijay Shekhar Sharma called for laid off technology and product engineers to join the company, in a tweet on February 23.
The $1.1 billion unicorn is expected to launch its payments bank in coming months and scale its e-commerce business in collaboration with Alibaba.
