Startups in Europe feel the pinch as Gorillas and Klarna cut staff
Venture capital-backed companies in Europe are bracing for tough times ahead, as two of their unicorns have announced massive layoffs.
Express grocery delivery company Gorillas has announced 300 job cuts, reportedly for half the staff at its Berlin headquarters. The company is also considering withdrawing from Italy, Spain, Denmark and Belgium. Gorillas raised nearly $1 billion in October, aiming to use the capital at least in part to fund its expansion. The company currently has about $300 million left in the bank but owes significant debt to suppliers, and before the layoffs, its monthly burn rate was between $50 million and $75 million, according to a TechCrunch report.
Buy now, pay later Klarna has also decided to cut its 7,000-plus workforce, announcing 10% cuts on Monday as it likely faces a major downside round. Last week, a report emerged that the Swedish company could do just that You see her rating drop by 30%. From the $45.6 billion valuation it reached last June.
Unprecedented levels of funding have gone to venture capital-backed firms in recent years, but amid broader economic and geopolitical turmoil, signs of market weakness are beginning to appear. The war in Ukraine, rising inflation and declining investor appetite for public technology stocks — issues that Klarna and Gorillas cited as primary reasons for layoffs — have caused havoc in public markets, and the effect is now shifting to 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 the second quarter, more than 13,000 emerging technology employees have been laid off, according to layoff tracker Layoffs.fyi. Other recent announcements include artificial intelligence startup BeyondMinds, which is reported to be shutting down leaving its 65 employees, and healthtech unicorn Kry’s decision to downsize its team by 10%.
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