Fampay, Teen-Focused Fintech Startup, Faces Employee Departures and Cost-Cutting Measures

• ByStartupStory     |    April 17, 2023

Fampay, a Bengaluru-based neobank that enables teenagers to make online and offline payments, has reportedly experienced employee departures 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, product and growth lead, and Fatema Raja, design lead, as per the sources. Additionally, it is said that Fampay has terminated nearly 50 employees in an effort to reduce costs and extend its runway. However, Fampay’s co-founder and CEO, Sambhav Jain, denied the layoffs, stating, “…we had to let go of less than 10 people across all levels in 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 financings for an Indian startup at that time. The company has raised a total of around $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 seeking new funding opportunities, but talks have not materialized. Jain, on the other hand, denied this claim, stating, “We haven’t been out 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 terms of scaling and controlling expenses. In the fiscal year 2021-22, the company reported operating revenue of Rs 3 crore, while its expenses exceeded Rs 50 crore, resulting in a loss of Rs 43.3 crore, according to its annual financial statement with the Registrar of Companies (RoC).

Fampay’s founders did not provide any quotes regarding the recent developments. However, the company’s struggles highlight the competitive landscape and financial pressures faced by fintech startups in the Indian market.

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