Fampay, teen-focused Fintech startup, faces staff layoffs and cost-cutting measures

Fintech startup

• OfStartup Story Team | 17 April 2023

Fampay, a Bengaluru-based neobank that enables teenagers to make online and offline payments, has reportedly experienced staff layoffs and cost-cutting measures in recent weeks, according to sources familiar with the matter.

The company has seen some of its top-level employees leave, including Shobhit Gupta, head of engineering, Brijesh Bhardwaj, head of product and growth, and Fatema Raja, head of design, according to the sources. In addition, Fampay is said to have laid off nearly 50 employees in an effort to reduce costs and expand its runway. However, Fampay co-founder and CEO Sambhav Jain denied the layoffs, saying, “…we had to let go less than 10 people at all levels of the overall company due to team restructuring.”

Fampay had raised $38 million in Series A funding nearly two years ago, making it one of the largest fundings for an Indian startup at the time. The company has raised about $42.7 million from investors such as Elevation Capital, Sequoia Capital, Venture Highway and Y Combinator, among others. However, sources revealed that the company has been looking for new financing opportunities, but talks have not materialized. Jain, on the other hand, denied this claim, saying, “We have not been in the market to raise and never engaged with anyone for M&A.”

Despite having a user base of over 10 million and operating for four years, Fampay has faced challenges in scaling and controlling spending. In the financial year 2021-22, the company reported operating income of Rs 3 crore, while expenses exceeded Rs 50 crore, resulting in a loss of Rs 43.3 crore, according to the annual accounts of the Registrar of Companies (RoC).

Fampay’s founders did not provide any quotes regarding the latest development. However, the company’s struggles highlight the competitive landscape and financial pressures facing fintech startups in the Indian market.

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