New data indicates: that startups are laying off more staff. That said, the pace of layoffs is modest compared to the economic correction in early 2020. When COVID first locked many countries, the global economy shivered and overnight startups had to deal effectively with a hugely changed environment. world.
Layoffs at companies like Toast, Airbnb, TripActions and others were symbolic of how some still private companies felt their markets were effectively shutting down overnight. (Both Airbnb and Toast recovered and went public; TripActions evolved into a more general business spending service.)
Marketingwithanoy+ is holding an Independence Day sale! Save 50% on an annual subscription here. (More about Marketingwithanoy+ here if you need it!)
The correction for 2022 is different. It was slower to arrive, giving startups more time to adapt to changing market conditions. And it was predicted by declining public markets that, we assume, allowed some private companies to save cash in anticipation of, say, a more conservative financing market. The result is a milder rate of layoffs.
In a dataset on the startup job market from Carta — which sells software to help companies manage their capitalization tables — it’s clear that while layoffs are mounting in private markets, the cutbacks are simply not happening as quickly as they were in 2020. are also nowhere near the same absolute pace when viewed as a percentage of the total number of leaving employees at startups.
Let’s chat through the data and then take a quick look at other data points related to the increasing prevalence of remote work and what proportion of payroll unicorns are spending on tech talent. Cool? Let’s go.
The rising rate of layoffs at start-ups
A few things to ask yourself before looking at the chart below. First, were involuntary startup layoffs on the rise or fall before the 2020 snap correction? In addition, when did involuntary start layoffs reach a local minimum as a part of the total staff reduction at startups?
The answers are, as you can see, respectively rising and about the start of Q4 2021: