VC-backed companies in Europe are preparing for tougher times ahead, with two of its unicorns announcing significant layoffs.
Rapid grocery delivery startup Gorillas has announced 300 job cuts, reportedly about half the employees at its Berlin headquarters. The company is also considering pulling out of Italy, Spain, Denmark and Belgium. Gorillas raised nearly $1 billion in October, intending to use the capital at least in part to fund its expansion. The company currently has around $300 million left in the bank but owes large debts to suppliers and, prior to the layoffs, had a monthly burn rate of $50 million to $75 million, according to a TechCrunch report.
Buy now, pay later juggernaut Klarna has also decided to slash its 7,000-plus workforce, announcing cuts of 10% on Monday as it potentially faces a significant down round. Last week, a report emerged that the Swedish company could see its valuation fall by 30% from the $45.6 billion valuation it reached last June.
Unpreceded levels of funding have gone into VC-backed companies in recent years, but amid broader economic and geopolitical turmoil, signs of a weakened market are beginning to show. The war in Ukraine, rising inflation and a drop in investor appetite for public tech stocks—issues cited by Klarna and Gorillas as the underlying reasons for the layoffs—have wreaked havoc in the public markets, and the impact is now filtering down into the private arena .
More companies are likely to announce layoffs and hiring freezes in the coming months as they look to extend their runways. So far in Q2, over 13,000 tech startup employees have been let go, according to layoff tracker Layoffs.fyi. Other recent announcements include AI startup BeyondMinds, which reportedly closed its doors letting go of its 65 employees, and healthtech unicorn Kry’s decision to reduce its team by 10%.
Featured image via Andrii Yalanskyi/Getty Images
