Vtex cuts 11% of staff to preserve cash
Tech company follows investor recommendation in the face of liquidity restriction
Vtex, a Brazilian multinational of technology for ecommerce, laid off 193 people and joins the growing group of startups that have been making cuts in recent months. Downsizing is part of tech companies’ measures to weather the turmoil — investors demand greater efficiency and cash generation, even if it means slowing growth. Resorting to new funding rounds to fund the current structure has also become more difficult.
In the case of Vtex, which is listed on the stock exchange, the depreciation since the IPO has already reached 83% – which makes a follow-on practically unfeasible. When NYSE debuted last July, when tech stocks were still on the rise, they shot up more than 25%.
The dismissal at Vtex draws the market’s attention because, in addition to being capitalized on the IPO, the company held a large event in São Paulo last month – with Lewis Hamilton among the guests – and the tone was optimistic. According to a source, the event had been scheduled and budgeted for longer and over the past few weeks it has become clearer that the turmoil is likely to continue.
“Today, we announce a new stage in our efficient expansion cycle. This step comes with difficult decisions, which directly impact 193 professionals,” the company said in a statement. The layoffs represent 11.3% of the company’s workforce of 1,700 employees, which has four offices in Brazil and 15 abroad, including other countries in Latin America, Asia, the United States and Europe.
“The decision to reduce our workforce was taken as a strategic judgment on which organizational structure can deliver our priorities adjusted and aligned to this growth-oriented cycle efficiently,” said Vtex. “We are committed to helping impacted employees with the resources they need to transition.”
Due to the segment in which it operates, Vtex can also feel the impact on customer demand. Infracommerce, Quinto Andar, Facily, Loft, Creditas, LivUp and Olist have also made adjustments to their team size in the last three months. It is not exclusive to Brazil: abroad, startups are also reducing their teams – the largest fintech in Europe, Klarna, laid off 10% of its employees at the beginning of the week.
In letters to entrepreneurs and investors, managers and advisors such as Sequoia, Y Combinador and Lazard have highlighted in recent weeks that the storm for tech companies could be long – one reason being the cost of money that, with high inflation in markets like the USA and Brazil, should not be cheap anytime soon.
Source: Value Pipeline