Bloomberg Línea — Startups in Latin America that received millions in oversubscribed checks led by SoftBank Latin America Fund, Tiger Global and other funds just a few months ago now cite “efficiency” to justify staff layoffs.
The cuts are part of a global movement to cut costs at a time when rising interest rates make investing in technology more expensive.
Google, for example, plans to curb hiring for the rest of the year in the face of a possible economic downturn, CEO Sundar Pichai said in an email to employees.
Pichai said the company will focus on hiring for “engineering, technical and other critical roles” in 2022 and 2023, according to a company email seen by Bloomberg News.
Latin American startups Alice, Jokr and Tribal are the latest companies to announce layoffs.
Brazilian individual health insurance provider Alice has confirmed it laid off 63 employees in its sales department earlier this month, and said those affected will receive extra pay and extended health insurance for two months, in addition to mandatory severance pay.
The startup also said it has reallocated 20 professionals to other areas, and attributed the layoffs to the need to resize its sales team, as per its expansion plans, in order to be more efficient and sustainable in the long run.
Alice had raised a Series C round for $127 million from SoftBank last December.
“Each person made redundant will also have access to a company specialized in outplacement in the job market to support them in their search for new challenges. We know the impact that a dismissal has on a person’s life, and we seek to make this moment as human as possible,” Alice’s CEO André Florence said in a press statement.
The company currently has more than 680 employees, and said it is still hiring for engineering, product, human resources, business, design, and marketing staff.
Mexican credit fintech Tribal, a competitor of Jeeves, is cutting 15% of its team, mostly from the sales department, a person familiar with the matter who requested anonymity told Bloomberg Línea.
The source cited the macroeconomic scenario as the reason for the downsizing. People who joined the company as little as three months ago were let go, the source said.
Tribal had raised $60 million in a Series B round with SoftBank and Coinbase Ventures in February 2022 in order to expand in Mexico, Brazil, Peru, Colombia, and Chile, after having raised a $40 million hybrid crypto and fiduciary debt round led by Partners for Growth (PFG) and Stellar Development Foundation (SDF).
Last year, the company closed a combined Series A and debt round totaling $34.3 million led by QED Investors and PFG, with additional equity participation in the round from SDF - bringing the company’s total funding to $140 million.
Bloomberg Línea has yet to receive a response to its requests for comment from Tribal.
In June, Jokr, the delivery group of which Brazil’s Daki forms a part, said it was closing its US operations to focus on Latin America.
The closure of its offices in Boston and New York means the loss of 50 employees in that country.
The company currently operates in Colombia, Mexico, Chile, Peru, and Brazil. The company had already closed its operations in Europe.
“We have decided to discontinue our commercial activities in the US for the time being, which lately represent only about 5% of our business,” Jokr CEO Ralf Wenzel said in a statement in early June. “Latin America is particularly underpenetrated and underserved, which is why Jokr has put its focus and emphasis on the Latin American opportunity from the start.”
Brazilian Daki is Jokr’s largest operation.
Daki’s CEO and co-founder Rafael Vasto said the company maintains its growth plan in the country, focusing on the sustainability of the business and consciously structuring the expansion focused on capital efficiency, according to a press release.
“Considering the current context and learnings in a little over a year of operation, we have made small one-off adjustments to some positions in the country,” he said.
Daki made 16 layoffs from the corporate area, which, according to Vasto, does not impact the operation.
Currently, Daki has 250 corporate employees and 600 in operations, and expects to end the year with 1,000 employees in Brazil.
Founded last year, Jokr raised $260 million in a Series B round at the end of 2021, bringing its valuation to $1.2 billion in December.
According to LayoffsBrasil.com, which compiles lists of layoffs posted on LinkedIn, this month alone Ame Digital (Brazil’s retailer Lojas Americanas’ fintech arm), credit and buy-now-pay-later fintech Provu, online restaurant ordering startup Goomer, and the payments arm of Movile, iFood’s holding company, have also all made layoffs. Americanas S.A. informed that staff adjustments are made to ensure the long-term strategy of the business. Provu confirms that it made an adjustment to its workforce at the beginning of the month, due to the resizing of its business projections, considering the market moment. “The company understands that this measure meets its future needs, and the operation will proceed normally, without prejudice to customers and partners,” it said.
Bloomberg Línea has contacted those companies for comment.
-- Updated article to clarify Ralf Wenzel’s comment on the number of layoffs and add Provu’s statement
-- With information from Bloomberg News