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Sequoia-Backed FanClash Fires 75% Workforce Within A Year Of Raising $40 Mn

FanClash undertook the layoff exercise in three rounds and fired about 100 employees this year

Sources cited the ban on battle royale game BGMI in July last year as the main reason for the layoffs

The startup, backed by the likes of Polygon and Info Edge, also shut down fantasy Web3 gaming platform FanGuild

Delhi NCR-based fantasy esports startup FanClash has joined the long list of Indian startups that have conducted layoffs over the past one year. The Sequoia-backed startup laid off around 75% of its workforce this year, according to Inc42 sources.

The startup undertook the layoff exercise in three rounds and fired about 100 employees, the sources said, adding that the impacted employees were given two-month salary as severance package.

A detailed questionnaire sent to FanClash cofounders Richa Singh and Rishabh Bhansali didn’t elicit any response till the publication of this story. The story will be updated on getting a response from the startup. 

The sources said that FanClash has been struggling since the Indian government banned battle royale game Battlegrounds Mobile India (BGMI) in July last year, and this was the reason for the layoffs.

One of the sources mentioned above said that the startup used to earn a majority of its revenue from BGMI as the game was very popular among its customers from Tier-2 cities and beyond. As such, the ban on BGMI was a big blow to FanClash.

Apart from BGMI, FanClash also lets users play fantasy for esports such as FreeFire, COD Mobile, COD PC, Valorant, CS:GO, League of Legends, DOTA 2, among others.

However, the source said that fans of these games, unlike cricket and football fans, don’t actively play fantasy games. Because of this, FanClash decided to foray into cricket ahead of the start of the Indian Premier League (IPL). 

Another source said that the layoffs took place at a time when there weren’t major esports tournaments taking place. “Starting December, esports tournaments take a winter/festive break. This is when the DAU (daily active users) of FanClash further nosedived.” 

Apart from firing employees, the startup also shut down FanGuild, a fantasy Web3 gaming platform, and halted operations of its fan engagement platform FanSpace. 

“Considering the temporary uncertain environment towards mobile esports, we had no option but to restructure our business which meant that we had to ask 75 per cent of our workforce to leave. Therefore, we have decided to deprioritize some non-core business streams but have been agile to pivot our business model to focus on fantasy esports that are based on computer game titles such as CS:GO and DOTA,” said the third source – an employee requesting anonymity.  

The person further said that the company has been frugal about its expenditure and have adequate funds to support its business plans for years to come.

It must be noted that the layoffs took place months after FanClash raised $40 Mn in its Series B round in June 2022, a month before BGMI was banned. The funding round was led by Alpha Wave Global (formerly known as Falcon Edge) and saw participation from Sequoia Capital India, Polygon, and Info Edge. 

Prior to that, the startup raised $10 Mn in Series A round from Sequoia Capital India and others in August 2021. 

As per Inc42’s layoff tracker, Indian startups, including FanClash, have laid off over 23,000 employees since 2022, when the funding winter engulfed the Indian startup ecosystem.

The layoffs at FamClash come at a time when other fantasy gaming platforms such as Dream11, My11Circle, and MPL are gearing up for one of the most popular T20 cricket tournaments, the IPL. Former Shark Tank India judge Ashneer Grover has also forayed into the segment and launched CrickPe under his new venture Third Unicorn

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