On Wednesday, Fi, a neobanking startup backed by investors including Peak XV, Temasek, and Alpha Wave Ventures, has decided to lay off 10 percent of its workforce to extend its cash runway to two years amidst a challenging funding climate. The move comes as Fi grapples with the need to conserve resources and reevaluate its financial strategy.

The company, last valued at USD 520 million in July 2022, currently employs approximately 300 individuals, and the layoffs are expected to affect around 30 employees. Additionally, senior management personnel have been asked to accept pay cuts to reduce costs.

Sources close to the company revealed that Fi was approximately 30-40 percent behind its revenue targets for the first half of the year, and certain products, such as mutual funds and U.S. stock investments, had not met revenue expectations. Compliance issues delayed the launch of U.S. stock investments, while loan disbursals also underperformed.

Fi registered revenues of Rs 67 lakh in FY20, Rs 1.27 crore in FY21, and Rs 25.6 crore in FY22, with losses of Rs 9 crore in FY20, Rs 50 crore in FY21, and Rs 245 crore in FY22, according to PrivateCircle Research data.

Despite Fi's recent financial challenges, the company has applied for an NBFC (non-banking financial company) license, with expectations of approval within the next 5-6 months.

Fi, though lacking a banking license, has partnered with Federal Bank to offer bank accounts to customers while managing the app and related services. It is part of the neobanking wave seeking to disrupt traditional offline-heavy banking processes.

Founded by Sujith Narayanan and Sumit Gwalani in late 2019, Fi competes with startups like Jupiter and shares Peak XV as a common investor.