AI Startups Are Facing a ReckoningRead more

More Startup Layoffs Are Coming as Investors Push Founders to Conserve Cash

Venture investors advise founders they should “shrink to grow.”

Illustration by Josh Brill.
Illustration by Josh Brill.
April 18, 2022 10:10 AM PDT

Silicon Valley startups are facing hard choices: Cut jobs now or risk incurring worse pain later.

Following a hiring and funding boom in 2021, technology startups have started to lay off workers to conserve cash. In the past month alone, more than 2,000 employees have lost their jobs at half a dozen startups, including delivery company Gopuff and e-commerce software firm Fast, according to an analysis by The Information.

More cuts are likely to come. Venture capitalists, concerned that startups won’t be able to fundraise as readily as they did last year, say they have been pushing companies to reduce head count or slow hiring and potentially raise money at lower valuations. And professionals whose business booms when times get tough are seeing a rise in demand.

“We are in a time of flux,” said Martin Pichinson, co-founder of Santa Clara, Calif.based Sherwood Partners, which specializes in restructuring failing startups. “I think you’re going to see layoffs, more real estate not being paid and people really hitting the zone of insolvency.” (See a chart of startups that made job cuts below.)

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