Pathao bets on ecommerce as it regroups after layoffs and funding shortfall

Photo credit: Pathao

Ride-hailing companies are fast embracing the super app concept. Grab and Gojek are battling over ride-hailing, food delivery, logistics, and entertainment. US-based Uber is bundling ride-hailing, food delivery, and freight into a single platform.

In Bangladesh, homegrown startup Pathao is battling it out with fellow local player Shohoz and Uber for the ride-hailer crown as well as Germany’s Foodpanda for food delivery supremacy.

Recent developments, however, may indicate that the strains of that competition are beginning to show.

Pathao has just laid off a “substantial” number of staff and faced difficulties that have delayed the close of its series B funding round, according to co-founder and CEO Hussain Elius. Like its counterparts elsewhere in Asia, the startup is looking at differentiation to regain its luster – and ecommerce is top of its list.

Layoffs

It all seemed to be going so well for Pathao.

With big-name backers like Indonesian unicorn Gojek – which itself started out as a ride-sharing service for two-wheel transport – and Singapore-based Openspace Ventures (formerly NSI Ventures) on board, Pathao was arguably on track to become the most high-profile startup to hail from Bangladesh.

In May, Pathao said it expected to close its series B round at up to US$50 million during H1 2019, following up on its reported US$10 million pre-series B raise in April 2018. But the official announcement never came.

By late June, reports from Bangladesh indicated that Pathao was laying off significant numbers of its staff amid a cash crunch.

Photo credit: Pathao

One former employee that Tech in Asia spoke to said they were forced to resign along with about 300 other members of the startup’s approximately 600-strong team. The source further claimed that Pathao hired security guards to keep a lockdown on the company’s office while employees were made to sign resignation letters that they hadn’t written, in apparent contravention of local labor laws requiring employers to give advance notice of termination, or three months’ salary in lieu of notice.

The ex-employee also confirmed that the layoffs were related to cost-cutting. And while the source agreed that such measures are commonplace in high-growth startup environments, the way the company handed it left much to be desired.

Bangladeshi newspaper The Daily Star reported that the downsizing came as a knock-on effect of prospective investors pulling out of Pathao’s ongoing series B round, leaving the startup with just a few months’ runway.

Investor appetite down

Turning the ship around

Food, logistics, payments

Ecommerce FTW