Modalku Group Laid Off 38 Employees in Indonesia

Funding Societies or the Modalku Group announced streamlining business operations which resulted in the termination of employment (PHK) for 38 people out of a total of 214 employees in Indonesia. This decision was taken due to unfavorable macroeconomic conditions that impacted service users.

In its official statement, the Modalku Group ensures that affected employees will receive compensation according to applicable regulations. Various adjustments, such as access to health insurance until the end of the year, support mental health, CV writing, training interviews, and letters of recommendation will be provided.

The company also stated that this decision was taken to match current and future business priorities, namely providing support to MSMEs, both funding and payments, while making the transition to a more streamlined business. It will focus on the growth and profitability of the company.

After officially entering the service finance at the end of 2022, Modalku Group also recently launched the service Project Capital which facilitate additional funding for e-catalogue companies or vendors and LPSE (Electronic Procurement Services).

To date, the company has disbursed funding of more than $3,2 billion or around IDR49 trillion in 5 million SME funding transactions across all business operations. About 100 thousand entrepreneurs managed to keep the level default below 2%.

A new wave of efficiency

Even though Covid-19 is no longer a global pandemic, its impact is still being felt today. Many technology companies are still laying off their jobs due to deteriorating global economic conditions, as seen from the high inflation rate and rising interest rates. This condition has significantly worsened the investment climate.

Apart from Modalku, several fintech startups have already announced their business efficiency, including Ayoconnect (FaaS) which cut 10% of its total employees in Indonesia and Qoala (insurtech) which laid off 80 employees in Indonesia and Malaysia.

Efficiency measures are also taken by P2P lending Acceleration, in which this situation forced the company to postpone its IPO implementation from the original plan on August 9, 2023 to 2024. This was triggered by the absence of the right strategic investors to support this corporate action. Akseleran also carried out internal restructuring by laying off 60 employees.

Uncertainty in macroeconomic conditions is often used as a scapegoat for the restructuring and efficiency measures of a number of startup actors. Technology companies are encouraged to quickly make adjustments to their focus and business needs in order to find a path to profitability. Meanwhile, investors are being monitored more closely in providing funding.

Based on publicly recorded data DailySocial.id, in the odd half of this year there were around 73 publicly announced startup funding (34 transactions were stated at nominal value) with a value of $707 million. This figure decreased 74% from the same period last year with 149 funding transactions (99 transactions announced value) or with a value of $ 2,69 billion.