Despite Miro, Consensys downsizings, tech layoffs are at a 2-year low

It’s easy for startup news to seem bleak.

On Wednesday, enterprise productivity startup Miro announced firmwide layoffs of more than 15%, or 275 people. Also this week, blockchain developer Consensys and publicly-traded file-sharing company Dropbox both cut their workforces by 20%.

But zoom out on the entire tech ecosystem, and it’s a very different picture.

Startups appear to have effectively cut down their headcount since the market reset in mid-2022, and downsizing has become much less common.

That’s against a backdrop of fewer layoffs in tech overall. Fewer tech employees are being laid off now than in any quarter since Q2 2022, according to data compiled by Layoffs.fyi, which tracks job cuts.

In October, just over 3,000 employees at 33 tech companies were affected by layoffs, the data shows. That compares to over 8,000 employees laid off in October 2023. The frequency of tech layoffs has consistently declined since the peak in Q1 2023. In Q3, 123 tech companies had layoffs, a 45% decline from the same period last year.

As fundraising for startups fell off a cliff in the summer of 2022, venture investors advised their companies to dramatically slim down expenses, including by reducing headcount. The primary indicator of success went from growing rapidly to establishing a path to profitability for much of the ecosystem.

Expense cuts at tech companies ate into the margins of enterprise SaaS startups, whose customers opted to trim software subscriptions to cut costs. That, in turn, created a vicious cycle of layoffs.

Both Miro and DropBox’s leadership attributed the cuts to a need for inefficiencies and a flatter organizational structure. Miro, which is profitable, hasn’t raised venture capital since its $400 million Series C in 2021. Iconiq Growth led the round, which valued the B2B productivity tool maker at $17.1 billion.

Some verticals have fared better than others. The market has been particularly hard on sectors like SaaS and fintech where companies raised at extremely aggressive valuations at the height of the bull market.

But overall, the outlook for startups has improved, even though the IPO window remains shut. The Nasdaq, a tech-heavy stock index, is up 23% since the start of 2024.

The AI boom—and inroads made to enterprise efficiency enabled by AI tools—has brought venture investors back to the fundraising table.

In industries that touch AI, fundraising talks have been getting more competitive on price. Several of the most prominent venture funds in the ecosystem, including a16z, General Catalyst and Thrive Capital have all raised massive war chests this year to deploy into new startups.

Earlier this year, IVP partner and prominent venture capitalist Tom Loverro issued new advice to founders: get back on the offensive.

“If your cash burn is under control and your runway is secure, start thinking aggressively. Because if you don’t, a more nimble and aggressive startup will,” Loverro said.