The Pune office, which opened in January this year, with 40 employees, had already been whittled down to 25.

Following its initial flush after it was launched in 2014 by five graduates of the Indian Institute of Technology, Mumbai-based online food ordering startup, TinyOwl, is now caught up in the maelstrom of employee animus.

The unremitting series of lay-offs which commenced in September, climaxed with disgruntled employees holding TinyOwl co-founder Gaurav Choudhary hostage for nearly 48 hours, clamouring for their pending salaries and full and final settlement of their dues.

The Pune office, which opened in January this year, with 40 employees, had already been whittled down to 25, with the founders justifying the ‘restructuring’ as vital for a “sustainable, profitable and scalable business.”

Mr. Choudhary, who was in town on Wednesday to announce the lay-offs of the remaining employees, was caught off-guard when the latter trooped on him demanding immediate settlement of their dues.

Following heated arguments, Mr. Choudhary, who said he felt “threatened” called the police for security. The fracas became general after a cohort of local politicians from the ruling parties entered the premises on behalf of the employees.

On being grilled by the police, Mr. Choudhary told them that as the market had crashed, the firm was facing a fund crunch and that the company could not guarantee immediate settlement.

A frazzled Mr. Choudhary was finally allowed to leave his company’s premises after a two-day ordeal.

Downplaying the incident, Harshvardhan Mandad, CEO, Tiny Owl, issued a conciliatory statement late Thursday stating that the firm “empathized with each and everyone involved” while remarking that speculations about TinyOwl not meeting contractual obligations were completely untrue.

“We have always been an honest and upfront company, not meaning to keep anyone’s hard earned money blocked. We assure all employees are being offered full and final settlements, and we are also trying to help secure new jobs for them in our capacity,” read the statement.

The e-commerce has shown the door to more than 270 employees in less than two months besides shutting shop in four cities, stating that would operate only on the e-sales platform in these places.

It now retains its operations in Mumbai and Bangalore. Within months of its founding, TinyOwl tasted the elixir of venture capital funding from VC firms like Sequoia Capital and Matrix Partners.

The incident is reflective of the dire straits of arriviste entrepreneurs dabbling in the online food delivery segment. TinyOwl’s condition mirrors that of Zomato, the Gurgaon, New Delhi-based food discovery and delivery startup, touted the country’s ‘biggest in the food e-commerce segment’ which recently laid-off nearly 300 of its employees.