The startups backed by venture capital funds have begun laying off employees to cut costs as the global economy braces for a possible recession.
Online recruiting assistant Triplebyte, hospitality startup The Guild, and luxury sleeper-bus service Cabin have already reduced their workforce by 20%, reported The Information, citing unnamed sources.
The publication has warned that more jobs will be lost in the weeks to come, pointing to the havoc caused by the Covid-19 pandemic on the global financial market.
Startups in the travel and hospitality industries are the most vulnerable, as demand for their services has crumbled with countries after countries are going on lockdown.
The layoffs may increase several-fold in the weeks to come, says The Information, citing Oren Barzilai, CEO of EquityBee.
“Companies are laying off employees or about to lay off employees to reduce burn and to prepare for winter,” he said. “We’ve never seen anything like this before.”
Analysts expect nearly 80% of startups to reduce their workforce to survive the crisis. Last week, business-travel startup Lola removed almost 50 of its employees.
Some startups in the state of Washington are choosing to lay off employees temporarily, meaning these workers can report back to work once things return to normal.
Meanwhile, online platforms like layoffs.tech are full of gossips about looming cuts in the job market.
The financial wellbeing of startups came under the spotlight after Softbank-backed WeWork reported billions of dollars in loss.
Earlier this month, influential Silicon Valley venture capital firm Sequoia Capital suggested its portfolio companies that they cut costs and conserve cash to survive the crisis.