While consolidation might be a good remedy for the future to sustain the business with so many startups mushrooming up, it surely has its negative effects on the employees as most of them become redundant.
The latest such instance has been that of rental flat mate-finding application, Flatchat, which was owned by online real estate platform Commonfloor. The new owners Quikr has shut down the office.
The employees were given the option of joining one of its portfolio companies and move out, which many were not comfortable with. The development comes six months after Quikr acquired Commonfloor.
An employee told media, “Majority of the people have quit the firm and the office has been shut down. Quikr did not even give severance package but just a month’s notice.”
Reportedly, there were around 52 people in Flatchat, of which only technology team got absorbed in Quikr.
“While they (Quikr) were very positive post-acquisition, the offline message was to look out for new jobs. The company wants to focus on profitability. The company wants to focus on profitability, ” said an employee who was asked to resign.
Flatchat has 3-lakh users, including 10,000 in Singapore where the app was launched in 2015. Quikr said that the company is consolidating its assets after the Commonfloor acquisition.
A Quikr spokesperson said in an email response to ET, said, “Flatchat is merged with our messaging service Quikr Nxt. We have increased capacity in our Bengaluru campus to bring everybody together under one roof and have also taken more office space across India by signing close to seven leases for space in the past couple of months.”
“We continue to operate Commonfloor, Realty Compass and IRX after the acquisitions. Each of these companies compliments QuikrHomes’ product portfolio on the residential and commercial side.”
Quikr had bought Commonfloor for $100-million in January, just four months after Quikr launched its own home search business, QuikrHomes. It then shut down Commonfloor office in May.
According to employees, the integration of the facilities and employees had led to job losses with more than 150 employees of Commonfloor and many senior level executives including VPs exiting the company post the buyout.
The segment is witnessing a consolidation trend. PropTiger recently bought Makaan.com while Square Yards acquired three companies -realising.in, Luxe Real Estate and Ayden Tech Labs.
Investors were enthusiastic and confident during the initial rounds of fundraising by these startups and now companies themselves are looking for stronger partners to achieve growth.