Dental startup Dezy undergoes a painful realignment of its own

livemint.com:

BENGALURU : For dental-tech startup Dezy, a problem of plenty has forced it to lay off nearly 200 employees, shut a key division, and tweak its business model to focus on operating a chain of clinics. The startup, founded in 2018 and originally known as smiles.ai, began with selling transparent teeth aligners, competing with the likes of Toothsi, Snazzy and TeethLogic. This original business plan worked well, and orders spiked last year from a few dozens every month to thousands.

But that’s when the problems began, as Dezy struggled to keep up with the increase in demand, according to multiple people, including laid-off employees, Mint spoke with. The startup, which is backed by PeakXV (formerly Sequoia Capital India), confirmed it laid off about 180 employees over the past 18 months and that it has changed the focus of its business with an eye on expanding its clinics—an area it had kept away from earlier. Some employees have escalated the manner of their termination to the company’s investors, saying they hadn’t been paid a severance as per the terms of their contract.

Dezy has denied this. At least one employee has filed a legal case against the company, which currently has about 280 employees. Dezy’s initial business idea had involved manufacturing and selling clear teeth aligners, or braces.

The company would send its orthodontists for teeth scans of customers, offer a treatment plan, and then ship the aligners to the customers. Dezy had partnered with clinics for certain parts of the treatment, sending its own orthodontists to conduct the procedure and paying the clinics a commission for using their space and equipment. Last year, Dezy diluted this model as it struggled to keep up with orders, and began opening its