For fear of weak fundraising options in the wake of the WeWork implosion, startups tighten their belts in the late phase. The latest is another Softbank-funded company that includes Zume Pizza (80% of the layoffs), Wag (80% +), Fair (40%), Getaround (25%), Rappi (6%), and Oyo (5th %) then%), who fired all employees to lower the burn rate and reduce the need for financing. The forwarding startup Flexport fires 3% of its global staff.
“We are restructuring some parts of our organization to move forward faster, with greater clarity and convenience. This was the difficult decision to separate from around 50 employees, ”said a Flexport The spokesman tells TechCrunch after we asked today if he experienced layoffs like his colleagues.
Flexport had raised a $ 1 billion Series D led by SoftBank a year ago at an estimate of $ 3.2 billion, which equates to funding of $ 1.3 billion. Unlike its old-school competitors, the company helps to move shipping containers of goods between manufacturers and retailers using digital tools.
"We have invested too little in areas that help us serve customers efficiently, and we have invested too much in scaling our existing process when we actually had to be agile and adaptable to provide the best possible service to our customers, especially in a year of unprecedented volatility in global trade. " Speaker explains.
Flexport had another record year, working with 10,000 customers to finance and transport goods. The shipping industry is so large that it is still the seventh largest carrier on its top trans-Pacific route to the east. SoftBank was impressed by the enormous scope for growth and the use of software to coordinate the supply chains and optimize routing.
However, many late-stage startups are concerned about where they will see their next round after receiving huge sums of money from SoftBank at high valuations. By November, SoftBank was only able to raise around $ 2 billion for Vision Fund 2, despite the planned total of $ 108 billion, Bloomberg reported. LPs were partially frightened by SoftBank's reckless investment in WeWork. Further layoffs among the portfolio companies could increase concerns about having to entrust more cash.
If startups in the growth phase cannot bring enough institutional investors together to make big rounds or other huge sources of capital such as sovereign wealth funds are created for them, they may not be able to raise enough to stay on the fast track. Those who fail to achieve profitability or fail to exit may face downturns that are subject to stressful conditions, trigger talent exodus deaths or simply do not provide enough money.
Flexport has managed to escape with only 3% layoffs for now. Proactive measures to achieve sustainability may be smarter than the game that suddenly improves business or the financing climate. While other SoftBank startups have had to spend tons to displace direct competitors or to compensate for weak margins in on-demand services, Flexport has at least one proven business in which the established operators have fallen asleep at the wheel.