Subscription management and recurring billing platform Chargebee has laid off 10% of its staff as the Tiger Global-backed unicorn looks to cut down its operational debt.
"This difficult decision was driven by external market forces as well as our need to address the operational debt we have accumulated in the last few years," the startup's co-founder and chief executive officer Krish Subramanian says in a LinkedIn post.
"You are all aware of current global macroeconomic challenges – and everyone is bracing given the uncertainty we are going through," says Subramanian, adding that the startup is currently in an unfortunate situation where it has to make corrections to its scale and structure to build a more efficient company for the future.
This comes months after the Chennai and San Francisco-based startup raised $250 million in funding led by Tiger Global and Sequoia Capital at a valuation of $3.5 billion.
Explaining what led to the layoffs, Subramanian says at the start of Q2, macroeconomic factors began impacting public companies and the financing environment. While the startup changed its hiring plans and started implementing a stricter fiscal discipline to reorient the company towards long-term sustainability, the global economic environment has continued to be uncertain, says Subramanian.
It is clear that this new reality will require companies to move toward profitability at an accelerated pace, he adds.
"Our years in high-growth mode have created operational needs across the company, which is impacting our ability to execute. Facing a growing gap between our revenue and spend, we have been reducing our expenses across various areas including tools, consulting, and contractors etc. While the scaling decisions were under our control and responsibility, the economic situation and lack of visibility into the future has made it harder for everyone," Subramanian explains.
"Today, the scale at which we are operating makes it very difficult to control expenses with costs that increase with each individual, including programs they need to be successful in their jobs," the CEO says. "We have a responsibility to build a financially sound business for the greater interest of everyone involved. While historically I have been philosophically opposed to layoffs, after careful consideration, it is best to act now to offer separation packages to affected colleagues," he adds.
The startup claims it has made every effort to offer severance, equity and job transition support to ease some of the stress caused by these changes.
Chargebee became a unicorn in April last year when it landed about $125 million in funding from a clutch of investors at a valuation of $1.4 billion.
Founded in 2011 by Subramanian, Chargebee develops tools to help SaaS (software-as-a-service) and SaaS like businesses to streamline revenue operations. The company integrates with payment gateways like Stripe, Baintree, PayPal and enables its clients to automate recurring payment collection, along with invoicing, taxes and customer management. The startup counts Freshworks, Calendly and Fujitsu among its clients.