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After reporting $13mn funding round in Feb, Truck It In announces 'severance packages'

  • Announcement points to a larger trend of layoffs within tech startups globally
Published June 2, 2022

Truck It In, set up in August 2020 to make freight movement more efficient by connecting truckers and shippers through its online platform, said it is “recalibrating its strategy” due to which some employees “will be moving on to solve other challenges”.

It did not specify how many staff members will be impacted, but did say in its statement on June 1 that it intends to provide generous severance packages and facilitate alternate employment opportunities.

Just four months ago, the Karachi-based firm had raised $13 million in early-stage funding, the largest seed round for a logistics startup in the Middle East and North Africa (MENA) region as well as in Pakistan. The latest round took total raised capital to $17.5 million.

The seed round was jointly led by venture capital firms Global Founders Capital and Fatima Gobi Ventures.

Truck It In's fund-raising rounds

Karachi-based Truck It In raises another $13mn in early-stage funding

Pakistan’s Truck It In raises $3 million, closes pre-seed at $4.5 million

According to the company’s most recent statement, it has improved and optimised logistics for more than 600 businesses and digitized thousands of truckers across Pakistan, and it remains committed to serving the shippers and truckers of Pakistan in a “leaner way, ensuring that we create value for all of our stakeholders and chart our independent path forward.”

It said it would do this by focusing on sustainable growth, optimised operations footprint, and simplifying its infrastructure.

Ending the post on its website on a positive note, the company said it is “bullish on the future of freight in Pakistan.”

Are tech startups in trouble globally?

The announcement comes right after another Pakistani tech startup, grocery delivery service Airlift, said it is slashing its global headcount by 31%, and pulling out of several markets both in and outside of Pakistan as it realigns its strategy amidst a global recession.

Airlift: trouble in startup paradise?

Just as Airlift had high hopes of what it had set out to achieve when it announced its last fundraising round in August 2021, Truck It In had also said it had its eyes set on becoming the “nexus of road freight in the country by simplifying business for Pakistan’s 3 million SME businesses and SME truckers (80% of the supply market)".

At the time, CEO Muhammad Sarmad Farooq had said that in the past year, revenue had grown 37x.

On a more global scale, mobility startup Swvl, based in Dubai but with operations in Pakistan, also said it is planning to lay off 32% of its workforce. Earlier on Thursday, it said it is pausing its inter-city rides starting June 3 "in light of the economic downturn", while city-to-city travel will remain open.

In a report, CNBC said instant grocery app giants – Turkey’s Getir and Germnay’s Gorillas –were laying off hundreds of employees, while Zapp had proposed redundancies in its UK team.

“The current macroeconomic climate has become incredibly challenging, with very little visibility of when things will improve. This uncertainty is seeing investors reduce their risk appetite considerably, favouring profitability over growth,” a spokesperson for Zapp was quoted as saying.

Meanwhile, Crunchbase compiled a list of roughly 60 US tech companies, not just startups, that have recently announced layoffs. These include big names like Netflix, PayPal and Robinhood.

“The public markets have been hit hard in 2022, and that’s trickled down to the private markets,” the report said, adding that “inflation concerns, rising interest rates and geopolitical issues have all contributed to a roller coaster stock market.”

“Startups—especially the ones who benefited from a pandemic boom that’s starting to cool—are starting to feel the pressure too. Valuations, particularly at the late stage, have started to dip, and startups say it’s much more difficult to raise new funding in this environment,” the report said.

But when Business Recorder asked Salman Sattar, co founder and CEO of e-commerce startup Bagallery, if tech startups are in trouble, he was a bit more upbeat: “In general tech startups are not in trouble," he said on Thursday.

"The startups who were spending keeping in mind that their next round will happen before July 2022 are the ones taking correction as they know fund rounds will be difficult for next 6 to 9 months so they are trying to ensure they have fuel to run for another 12 months.”

Pakistan’s startup sector witnessed its best year in 2021, as 81 deals worth $350 million were made. The amount raised was more than 5x of what was raised in 2020 i.e. $65 million.

This momentum also carried over to 2022. During the first quarter of 2022, startups raised a substantial $163 million, according to a Deal Flow Tracker by Invest2Innovate.

E-commerce deals accounted for 60% of all the capital raised this quarter ($202 million), but only 31% of all deals. Fintech deals accounted for 27% of all capital raised this quarter i.e. $17 million while accounting for 30% of the deal count. Meanwhile, trucking and logistics startups raised $13 million.

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