Since March 11, about 100 tech startups in the United States have announced layoffs, with a total of about 8,000 layoffs.
Editor’s note: This article comes from Tencent Technology , compiled Mingxuan.
Since March 11, about 100 tech startups in the United States have announced job cuts, with a total of about 8,000 job cuts.
Startups that have quickly run out of cash or have not recently raised external funding appear particularly vulnerable after the epidemic has suddenly cropped up. Some tech startup employees have gone through painful layoffs, such as announcing layoffs during a collective video call. According to data from Layoffs.fyi, a data service provider that collects layoffs from technology companies through public information, since March 11, about 100 technology startups in the United States have announced job cuts, with a total of about 8,000 layoffs. Considering that Layoffs.fyi’s data includes only publicly announced data, the actual number of layoffs may be higher.
At the same time as U.S. startups are laying off staff, the United States is experiencing large-scale layoffs. The US Department of Labor’s preliminary number of jobless claims released on Thursday showed that the number of people applying for unemployment benefits reached a record 6.6 million last week. The latest report supplements the previous data, which shows that 3.3 million people applied for unemployment benefits in the week ending March 21. This means that about 10 million people applied for unemployment benefits in the last two weeks of March, almost half of the 24.8 million new jobs created in the United States between February 2010 and February 2020. That number also exceeded the 8.7 million people during the Great Recession.
Venture-backed startup representative is working hard to get startups to take a share of the $ 349 billion small business loan authorized by Congress. The loan is part of a $ 2.2 trillion economic rescue plan. butJudging from the current situation, most startups do not have the qualifications to apply for loans.
Difficult to obtain government loans
On Tuesday, the U.S. Treasury Department and the Small Business Administration provided new details on which companies can obtain loans, stating that loans are mainly for small businesses with 500 or fewer employees. Although many young tech companies are small enough, regulations on disclosure and investor ownership may prevent traditional structured startups from qualifying for loans.
Justin Field, senior vice president of government affairs at the National Venture Capital Association, said not adjusting these rules could lead to more economic pain, and not just for startups. . He said: “I think you will see hundreds of thousands of people unemployed across the U.S. and more businesses rely on these unemployed people as customers. I think if they can’t solve this problem, you will face a big Scale layoffs. “
The proposed rules will impose strict requirements on minority shareholders who hold more than 20% of the startup. Field said that if a start-up abuses government loan funds, they will impose criminal liability on venture capitalists. There are other complex disclosure requirements that may make it difficult for most startups to qualify for loans. So far, the Ministry of Finance and the Small Business Administration have not commented on the report.
Troubled startups can benefit from loans. If the loan is used to pay employees-usually the largest outlay for a startup-the loan becomes a grant. Tech and venture capital industry groups have been pressuring officials to make it clear that startups are eligible for loans under existing regulations or to issue new guidelines. Given the urgency of this demand, startup advocates want to see the government abandon restrictions on minority investors. At the same time, private equity firms are lobbying the government to make the companies they invest eligible for government loans. But so far, these efforts have not been successful.
Startup advocates believe that venture capital companies’ investments are often too complex to meet information disclosure requirements, and minority shareholders often do not have sufficient control over the companies they invest in. But there are many reasons why startups are treated differently from other small businesses. Unlike restaurants or hair salons, an ecosystem of wealthy investors specializes in funding startups. Unlike most small companies, venture-backed startups are built on the idea of going big or going all out. There are so many companies in need, and government officials cannot currently consider only startups.
Announcement of layoffs
A number of U.S. startups announced layoffs on Thursday, including Lasz, a former senior vice president of human resources at Google.lo Bock) startup Humu. As a software startup with about 80 employees, Humu focuses on the emotional labor of employees. They call their software a combination of “several decades of scientific research on human behavior + machine learning + love. Humu uses machine learning to remind organizations and other employees to thank employees who have worked emotionally, to optimize the relationship between the company and employees, so that employees can work happier, improve work efficiency, and reduce staff turnover.
Along with Humu’s announcement of layoffs, it also announced that it will reduce the number of hiring this year by 40%. Bok confirmed the company’s layoffs, but declined to disclose the exact number of layoffs. “Redundancies are always difficult, but in the context of the largest economic slowdown in a century, everyone has been forced to make painful decisions,” Burke said in an email. Humu raised $ 40 million through two rounds of funding last year.
After the New Crown epidemic broke out, the co-creation space startup has become the hardest hit area for layoffs. As the economy tightens and corporate employees are trapped at home, co-creation space startups will face a serious crisis because small business customers will not renew their contracts or default on rent. Industrious announced on Thursday that due to the economic slowdown caused by the epidemic, the company will lay off or forcibly leave about 30% of its employees, and will reduce wages for all employees. New York-based Industrious previously raised $ 200 million in funding through multiple rounds of funding.
It was reported earlier this week that WeWork’s competitor, Knelo, is undergoing mass layoffs. The company has already laid off 30% of its staff and will further lay off 20%. Earlier this year, Kntel had a total of about 500 employees, which was reduced to 400 earlier this week. But the company said that as the layoff plan continues, about half of its employees have either lost their jobs or entered unpaid leave. WeWork laid off 2,400 people last fall, and cut about 250 again in March this year.
Industrious, which has about 500 employees, said the company will lay off about 90 people and will reduce the working hours of 64 employees or make them mandatory vacations. The company also said that the remaining employees will be cut in salary, of which the CEO’s salary will be reduced by 25%. Fired employees will receive severance pay for at least 1 month, 3 months of medical insurance and, in some cases, early access to stock options.
In addition, ClassPass, a subscription-based fitness platform, announced the layoffs on Thursday because the government’s social distance epidemic prevention measures have significantly reduced the company’s revenue. ClassPass currently has approximately 700 employees in New York, San Francisco, London, Sydney and other cities. The layoffs will affect 53% of employees, 22 of whom were resigned and 31% of them being forced to take leave.
ClassPass was valued at over $ 1 billion at the beginning of the year. The company confirmed that the outbreak caused publicDivision revenue decreased by 95%.