Koo halts salary payments amid financial woes, seeks strategic partners

Indian platform that was once seen as a potential rival to Twitter says that it is in discussions with potential strategic partners

Koo, the homegrown microblogging platform once seen as a competitor to X (formerly Twitter), has announced halting salary payments for April as it grapples with financial constraints.

Koo announced the decision in a Zoom call with employees early April, sparking surprise and concern as it had allegedly not communicated such a plan earlier.

While addressing the salary payment issue, Koo stated that it is “actively engaged” in discussions with potential strategic partners to infuse fresh capital into the platform. However, delays in finalising partnerships have led to salary payments being interrupted. The company has assured employees that once partnerships materialise and fresh funds are arranged, salary payments will resume.

Koo has opted not to resort to layoffs, a practice that typically involves severance pay. The company's workforce has shrunk by over 80 per cent since June 2022, leaving some 50 employees on board.

The remaining employees have faced salary cuts of up to 40 per cent since October 2023, further adding to concerns about the company's financial stability. Several senior employees left earlier this year, primarily due to substantial reductions in their remuneration.

Koo's challenges extend beyond employee compensation issues. The platform’s active users fell from 7.2 million in June 2023 to 2.7 million in March, marking a 62 per cent decline. The decline is partly attributed to the cessation of customer acquisition campaigns since June 2022.

Koo has struggled to establish a sustainable revenue model, despite backing from prominent investors such as Tiger Global, Accel, and Kalaari Capital, among others. The company's failure to secure Series C commitments has further compounded its financial woes, despite raising approximately $50 million to date.

Koo's financial performance has been lackluster, with an operating income of only Rs 14 lakh and a staggering Rs 197 crore loss in FY22. The absence of a viable revenue model has forced the company to heavily rely on cash burn for user acquisition, a strategy that has proven unsustainable in the long term.

Amidst challenges, Koo has been seeking a strategic partnership or considering acquisition avenues for the past year. However, despite prolonged negotiations and potential acquihire arrangements, recent developments suggest a less optimistic outlook. Unverified reports said content aggregator Dailyhunt's interest in acquiring Koo, underscoring the urgency for external support to ensure the continuity of its operations.

Koo has told stakeholders that its work will proceed uninterrupted despite delays in salaries and it continues to explore collaborative opportunities.