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Covid-19’s Impact, Hundreds of Startups Do Bulk Layoffs

Covid-19’s Impact, Hundreds of Startups Do Bulk Layoffs

It is undeniable that the Covid-19 pandemic is hitting many industrial sectors, including startup companies that are golden children in the current era of the digital economy. Hundreds of startups were even forced to lay off employees due to the economic recession during this pandemic.

The number of unemployed in Uncle Sam’s country has increased in the last five weeks to 26.4 million workers as reported by the US Department of Labor. Unfortunately, there are no detailed data on layoffs at Indonesian startups.

Covid-19’s Impact, Hundreds of Startups Do Bulk Layoffs

Quoted from Crunchbase reported by Merdeka.com, Wednesday (4/29/2020), that number has indeed decreased by around 810 thousand from the previous week. However, almost all the jobs were lost across the country and various business sectors.

21,609 workers had been laid off from startups as of April 21, since the Coronavirus was designated by the WHO as a pandemic on March, according to the CNBC report.

According to Roger Lee, Executive at the Human Interest startup which collects startup layoff data, said layoffs are likely to decline lately, but layoffs at startup are expected to continue in the future.

“The layoffs at startup have slowed for the past two weeks. It seems that in general, the number of unemployed has only declined. However, the decline is still small, there are still many people who were laid off,” Lee said.

Some Startups that Do Layoffs in the Middle of the Pandemic

As reported by various websites, here are several startups who decided to lay off because of the corona pandemic:

1. Iris Nova

The startup, which is supported by Coca-Cola, reportedly laid off half of its total staff because its retail and wholesale businesses were hit by a pandemic. The entire team at the startup was affected, except the workers and drivers in the warehouse team.

2. The Wing

A joint workspace focused on women, The Wing, fired almost all the space team and half the employees at its headquarters. That happened because 95% of the company’s revenue was lost due to corona.

The executives must also lose their salaries, also the salary adjustment of employees who were not affected by layoffs, as reported by Fast Company.

Covid-19’s Impact, Hundreds of Startups Do Bulk Layoffs

3. ClassPass

The ClassPass fitness platform fired 53% of its employees, with 22% layoffs and 31% left. Hundreds of employees have been affected by the pandemic. Referring to official LinkedIn, the company previously had 700 workers, with offices in New York, San Francisco, London, Sydney, Missoula, Mont.

Ten Thousands of Workers Become Victims

The wave of layoffs (layoffs) includes more than 3,800 workers in 40 companies ranging from hospitality, transportation, food delivery, to artificial intelligence (artificial intelligence).

Most of the companies are located in California, Austin, Boston, and the city of Portland in Oregon. From Crunchbase data, the company has assets approaching US$ 15 billion.

As an illustration, the period March 11 to April 21, 280 startups laid off as many as 21,609 workers. This number is up 21.1 percent from the previous period which recorded 245 startups laying off 17,844 workers.

Based on cities, startups in the San Francisco Bay Area international region recorded many layoffs, such as Houzz, Opendoor, Zume, Carta, and VSCO. The number is more than 6,000 workers. Also startups in big cities like New York (3,000 workers), Los Angeles (1,700), Boston (2,300), Miami (1,000), and Austin (500).

Covid-19’s Impact, Hundreds of Startups Do Bulk Layoffs

Most Affected Sector is the Food Startups

As reported by Layoffs.fyi, the most affected startup business’s sector, aka with many employees lay-offs, is the food industry sector with over 3,000 workers being laid off.

The consumer services sector is ranked second with 2,200 workers, real estate 2,100 workers, finance (2,000), travel (1,900), transportation (1,500), retail (1,500), fitness (1,500), marketing (1,500), logistics (860), recruitment (850), media (500), health (300), and others.

According to Lee, so far the startups that have reached the B and C series funding have done the most layoffs. While startup with series A funding is under both.