Start layoffs are: back, and the damage starts to pile up.
In early 2020, an online layoff tracker – Layoffs.FYI – was built to collect and tabulate layoffs at startup. The data source, based on media reports and other sources, was a hot item during the early COVID startup recession.
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However, as quickly as it rose in prominence, it seemed to fade. Startups and their backing investors realized shortly after budget cuts swept across the industry that most tech start-ups are at least Okay during the pandemic, slowing down the number of layoffs. Software companies ultimately enjoyed record demand from both customers and investors, ultimately fueling the SaaS bubble of 2021.
Now the bad times are back, albeit in a different form.
In 2020, we saw the startup market crumble into what felt like days; the current downturn, on the other hand, has been building up since the end of 2021. With that in mind, the gradual pace of layoffs this year isn’t a huge shock.
Data from Layoffs.FYI shows that after hitting a low between Q4 2020 and Q4 2021, cutbacks at startups have spiked from a very low level. And the same data set indicates that the second quarter has already matched the cuts of the first quarter; in numerical terms, Layoffs.FYI counted just under 9,300 startup layoffs in Q1 2022 and about 8,700 so far in Q2.
Neither figure comes close to the more than 60,000 job losses recorded by the same source in the second quarter of 2020.
But don’t let those comparisons stop you from worrying — the trends aren’t looking good.
From hot to not
Looking at the data by month, it becomes clear that the pace of start-up layoffs is accelerating. May is already ahead of the April and March results by mid-month, while March 2022 was previously the worst month since early 2021.
If the current trend continues, there could be layoffs at startups throughout the summer.