Massive Layoffs Devastate US Startups

As the COVID-9 pandemic continues to create havoc around the world, more startups are beginning to lay off their personnel. Such is the case of People.ai, a predictive sales startup backed by Andreessen Horowitz, Iconic, Lightspeed and other companies. TechCrunch reports the startup was valued at approximately US$500 million. The company has laid off close to 30 people, which represents close to 20 percent of its staff.

Founder and CEO, Oleg Rogynskyy, said the layoffs happened because the company had to make adjustments and plan for what may lie ahead due to the pandemic and not so much because of decreased sales. “We still have several years of runway with what we have raised,” he noted (the company has raised just under US$100 million in equity to date). “But no one knows the length of the downturn, so we wanted to make sure we could sustain the business through it,” says Rogynskyy.

Layoffs.fyi is a website that tracks on a daily basis all the people who have lost their jobs in the tech industry due to this pandemic. According to TechCrunch, the data is based mainly on public reports with a view to providing lists of people for hire. Layoffs.fyi reports today that approximately 25,000 people have been laid off from 259 tech startups and other companies as of March 11. The website reported that eight days ago the number was close to 16,000 people.

Nearshoreamericas.com reports that startups that cater the travel and hospitality industries are the most vulnerable. This is because business has greatly decreased as demand for hospitality services has been almost wiped out, especially in countries under lockdown.

It is unlikely that layoffs should come to a halt. These may increase several-fold in the weeks to come, says Oren Barzilai, CEO of EquityBee in an interview to The Information. “Companies are laying off employees or about to lay off employees to reduce burn and to prepare for winter,” he said. “We have never seen anything like this before,” says Barzilai.