Witnessing Fi, a notable player in the neobanking sector, being celebrated in the #LinkedInTopStartups list while simultaneously laying off 10% of its workforce certainly raises eyebrows and prompts questions about the criteria used for such rankings.
Launched with much fanfare in 2019, Fi has successfully attracted a whopping $169 million in funding. However, its expenditure of $37 million (Rs 9+50+245 Cr) to generate a modest revenue of $3.3 million (Rs 0.7+1.3+25 Cr) up until March 2022 paints a perplexing financial picture.
Neobanks have surged in popularity, presenting themselves as a breath of fresh air, especially when compared to the sluggish and bureaucratic nature of traditional banks, particularly noticeable during the chaotic last week of the quarter or financial year. Fi, like its neobanking counterparts, promises a user experience that is digitized, quick, transparent, and free from the red tape commonly associated with conventional banking.
However, despite these promises and the apparent allure of neobanks, Fi seems to be lagging, with its financial numbers for FY23 still shrouded in mystery as we approach the end of Q2 of FY24. This delay in financial reporting, coupled with the recent workforce reduction, certainly raises questions about the company’s internal operations and overall health.
It is worth noting that corporate governance has been highlighted as a crucial theme in the recent State of the Fintech Union report for 2023, a collaborative effort between Boston Consulting Group (BCG) and Matrix Partners India. This report underscores the importance of sound governance practices in the fintech sector, a standard that all players, including Fi, would do well to uphold.
In light of this, the juxtaposition of Fi’s recognition as a top startup and its current challenges serves as a stark reminder of the complexities and volatility inherent in the startup ecosystem, particularly within the fintech domain.
- State of the Fintech Union report, 2023 – https://www.matrixpartners.in/news/matrix-partners-india-and-bcg-launch-the-state-of-the-fintech-union-2023-report-2
- Fi layoff – Money control – https://www.moneycontrol.com/news/business/funding-winter-peak-xv-temasek-backed-fi-will-cut-10-staff-to-preserve-cash-runway-for-2-yrs-11439231.html
- Fi layoff – Inc42 – https://inc42.com/buzz/neobanking-startup-fi-lays-off-10-of-its-workforce-in-a-restructuring-exercise/