The economy deteriorates and financial markets falter. Start-ups and technology companies are showing first worrying signs. The announcements of layoffs follow one another. PayPal, Getir and Bolt are the latest to part ways with employees. Overview of these announcements.
Dozens of dismissals for PayPal
PayPal has started laying off employees who work in risk management and operations, reports Bloomberg. Dozens of employees working in Chicago, Omaha and Chandler are affected. The fintech had announced in May that it wanted to lay off more than 80 people working at its headquarters in San José. These layoffs come as its workforce has steadily increased in recent years to reach 30,900 employees at the end of 2021, an increase of 33% compared to its pre-pandemic level.
PayPal is now looking to shore up its earnings after stagnating spending in recent quarters. In a report to financial authorities, PayPal said it incurred $20 million in restructuring costs in the first three months of the year (including severance pay). The company plans to commit an additional $100 million later this year to its restructuring. Ultimately, these job cuts will save it around $260 million a year.
Klarna and Bolt in turmoil
On the fintech side, the Swedish fractional payment giant Klarna will lay off 10% of its workforce, or about 500 people. The evolution of the economic situation has caused its valuation to fall and the start-up is again looking to raise funds.
She’s not the only one. One-click payment specialist Bolt is laying off nearly 240 people, or around 25% of its workforce. The one which was valued at 11 billion dollars earlier this year began this wave of layoffs on Wednesday May 25, 2022, reports the New York Times. These layoffs are attributed to “structural changes” in the middle of “macroeconomic challenge”.
Quick trade is weakened
The ultra-fast grocery delivery specialist Getir is following in the footsteps of its German competitor Gorillas. The Turkish start-up is set to cut 14% of its workforce worldwide, reports TechCrunch. This corresponds to nearly 4,480 people since it employs around 32,000 people in the nine markets in which it operates (Turkey, United Kingdom, Germany, France, ItalySpain, Netherlands, Portugal and UNITED STATES). Getir should also slow down its expansion since it is done with a lot of marketing campaigns and promotional offers that cost it dearly. But the start-up does not currently plan to withdraw from the markets where it operates.
Its German competitor Gorillas announced laying off nearly 300 people and want to refocus on 5 key markets. These announcements are not so surprising given the economic context. Start-ups in ultra-fast delivery have multiplied in a short time, they have raised substantial sums at very high valuations. But the money is no longer flowing and they will have to show investors that they can be profitable. A business model that has yet to be proven.
The British Zapp has also announced that it will cut 10% of its workforce, i.e. around 250 layoffs. The start-up will refocus on London but does not abandon all its expansion projects.
100 American start-ups
The American cloud security specialist Lacework would lay off 20% of its workforce. Overall, since the beginning of the year, a hundred American start-ups have laid off employees, reports the Layoffs.fyi site, quoted by the New York Times. Funding is much more difficult to find. This wave of layoffs which also affects European start-ups after the record fundraising of the year 2021.
Note that the Tech giants seem to be doing well. Since Microsoft and Apple raise wages to avoid redundancies. A strategy that could evolve if layoffs in start-ups continue.
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PayPal, Getir, Bolt… Layoff announcements continue in Tech
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