ReshaMandi, a prominent business-to-business (B2B) marketplace specializing in silk products, has laid off 80% of its workforce as it grapples with a severe funding crunch after failing to secure Series B funding.
The Bengaluru-based company, founded in 2020, has been compelled to significantly scale down its operations since last year. With a debt exceeding Rs 300 crore, ReshaMandi faces mounting legal challenges from lenders and vendors, with some creditors considering filing for insolvency, according to sources familiar with the matter.
ReshaMandi, which has raised approximately $70 million in equity and debt funding rounds, counts Creation Investments and Omnivore among its key backers. Despite its previous funding rounds valuing the company at $175 million, recent attempts to raise funds at a lower valuation of $25 million in January this year proved unsuccessful.
“The previous funding was at a valuation of $175 million which has come down significantly when the company tried to raise $5 million in January this year at a valuation of $25 million. Despite the down round expectations, it could not raise any funds,” stated one of the creditors planning to initiate insolvency proceedings against ReshaMandi.
Legal experts highlight that resolving stressed companies under the Insolvency and Bankruptcy Code (IBC) typically exceeds the stipulated timeline, with voluntary bankruptcies averaging 541 days. Self-initiation of insolvency can mitigate legal proceedings and facilitate creditor settlements but entails risks such as loss of control, potential liquidation, and decreased asset value.
ReshaMandi did not respond to queries seeking comment on its current financial predicament.
The company’s struggle underscores the challenges faced by agritech startups in securing sustainable funding amidst operational hurdles and legal disputes, reflecting broader industry challenges in the evolving startup ecosystem.
