Well-Funded Startups Are Cutting Costs and Laying Off Staff

December 9, 2016, 8:59 PM UTC
Boom With A View by Erin Griffith: Social Media
Illustration by Aleksandar Savic

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It’s the kind of thing that stinks to be right about. Earlier this week, I predicted that many startups would go through end-of-year layoffs. Some are trimming headcount after over-expanding based on revenue projections they didn’t meet. Some are shifting strategies. Others are in survival mode.

A few weeks ago, First Round Capital’s annual “State of Startups” survey revealed that 18% of the startups surveyed have undergone layoffs in the last year. I suspect if the survey were taken again in a month, that number would increase. Here are some of the startups cutting back:

Delphix, a provider of data visualization software, laid off 40 employees, Fortune has learned. The company has raised $119 million from Fidelity Investments, Icon Ventures, Greylock Partners, Summit Partners, Lightspeed Venture Partners, In-Q-Tel, The Kraft Group, and Credit Suisse NEXT Investors.

In a statement, the company said, “Our refreshed executive team also reflects the evolving market opportunity. With these changes, Delphix is well positioned to continue helping hundreds of the world’s largest organizations become more agile and innovate at greater speed.”

GuideSpark, a provider of software for human resources departments, laid off around 20% of its staff, or 60 people, in November, Fortune has learned. Guidespark Chief of Staff Pam Gonclaves confirmed the reduction “to expand and align its initiatives in the enterprise employee communications market,” and noted that employees were offered severance and outplacement assistance. The Menlo Park-based company has raised $42.5 million in venture funding from Meritech Capital Partners and Storm Ventures.

The Honest Company announced it would lay off 80 employees and close its office in Austin, Texas. President and co-founder Sean Kane and CFO David Parker will also step down. The news, which ran in Women’s Wear Daily Tuesday, wasn’t picked up by the wider business press.

The Honest Company is Jessica Alba’s consumer products startup. It has raised $228 million in funding, valuing it at $1.7 billion, from Wellington Management, Lightspeed Venture Partners, IVP, Iconiq, Pritzker Group, General Catalyst, Fidelity, and AllianceBernstein.

Earlier this year, the company was reportedly in talks to sell to a large consumer products company for around $1 billion. That deal never happened and in a surprise move, Unilever acquired Seventh Generation in October.

Beepi, an online marketplace for used cars, will lay off 180 workers and close operations in 16 unprofitable cities. The company will merge with a new venture called Fair that has not yet launched.

Mountain View-based Beepi has raised $149 million in funding from investors including DST Global, Foundation Capital and Flight Ventures.

YikYak, an Atlanta-based anonymous messaging app, laid off 30 employees, or 60% of its staff, The Verge reported. The company also lost its CTO earlier this year. The app’s growth has stalled, according to The Verge, ever since it began requiring users to use handles to post their anonymous messages.

YikYak raised $73.5 million from Sequoia Capital, Vaizra Investments, DCM Ventures, Azure Capital Partners, and Atlanta Ventures, valuing the company at $400 million. It’s not clear whether YikYak has developed a way to earn revenue.

Github, a San Francisco-based online project hosting startup, has made cuts to its sales department. The company confirmed the cuts to Fortune, saying the layoffs made up “less than 5%” of its employees. That would be around 30 people. A company spokesperson said the layoffs were part of Github’s focus on enterprise sales. “We are refocusing our resources in order to serve our customers more efficiently,” the spokesperson said.

Valued at $2 billion, Github has raised $350 million in funding from Andreessen Horowitz, Sequoia, IVP, Thrive Capital, and SV Angel.

AdRoll has laid off around 29 employees, Fortune has learned. The San Francisco ad-tech company cut headcount after deciding to “focus on the growth areas that we’re most excited about.” AdRoll has raised $90 million in funding from Foundation Capital, Institutional Venture Partners, Northgate Capital, Performance Equity, Glenmede, Merus Capital, Accel Partners and Peter Thiel.

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