The “global recession” is the major factor to close Airlift Operations
Airlift, one of Pakistan’s most successful startups, has announced that it will cease operations in the country, citing the “global recession and the recent downturn in capital markets” as the reasons for its decision.
A few months ago, the q-commerce startup reduced its operations in several cities.
“While the global recession and recent downturn in capital markets have had an impact on economic activity across the board, it has had a devastating impact on Airlift and made its closure inevitable,”
The company announced in a statement that Airlift’s operations will cease permanently on July 12th.
The development, according to the company, is an “extremely taxing decision” that affects a large number of stakeholders and an emerging technology ecosystem.
Airlift has proven to be one of the most resilient and agile startups emerging from emerging markets in recent years, according to the company, and it was able to navigate the COVID-19 crisis, pivoting into q-commerce and building scale in a new domain.
The company stated that when the recession hit, it “restructured” its business operations and adapted three codes in response to the situation, which include an immediate reduction in headcount, (ii) shutting down operations across all expansion markets, and (iii) revising platform configurations to ramp up monetization (i.e. introduction of higher prices and delivery fee).
“With the aforementioned changes, Airlift was able to achieve order-level profitability, maintain reasonable scale, and cut financial burn by 66%.” “As of July 2022, Airlift was approximately three months away from operating profitability (i.e. positive cash flow from operations) and approximately six to nine months away from company-level profitability (i.e. Free Cash Flow),” it added.
In light of the industry’s fast-changing landscape, the company announced in May that one of its investors stepped up to lead Airlift’s Series C1 financing.
“We’ve received tremendous support from the potential lead in opening doors to other investors to put together the round,” the statement continued, noting that investors such as First Round Capital, Indus Valley Capital, Buckley Ventures, and 20VC have agreed to participate in the round with large checks.
“By early July, Airlift had a clear path forward to closing the round – the Company had distributed documents for signature to all participating investors.” Last week, amid rapidly deteriorating global economic conditions, several participants expressed uncertainty in wire schedules and disbursements, implying that the Company’s capital requirements would not be met. The round was ultimately a failure.
“With the above clarity, a complete shutdown was unavoidable; Airlift could not risk not paying its employees or breaking its commitments.” The Board deliberated on this over several calls and ultimately decided not to take the risk of not paying teammates. The above became clear to our management team and the broader set of investors only on July 7th, a day before Pakistan’s Eid holiday.”
The company has also announced a severance package for its employees, including two months’ pay and the establishment of a job placement platform.
“As part of our ongoing shut-down process, our team will communicate proactively with suppliers, vendors, and other third parties to manage arrears and liabilities,” it added.
“Airlift hoped that the closure would not have an impact on the country’s overall technology ecosystem, which “will continue to thrive and that some of the most valuable technology companies in emerging markets are still yet to be founded.”