Startups in LatAm are Also Having Huge Layoffs

The tech sector is shifting from "grow, grow, grow!" to "make sure you have a good balance sheet" as budgets tighten due to high inflation and interest rates. Ebanx announced last week the year's biggest layoff so far — 340 employees, so we consulted the open-source project of layoffs.fyi to map out the region's major layoffs.

Two key trends stand out: the most significant ones (all top 10) have happened in Brazil, and they're happening as much, if not more, than in 2020. The largest in 2020 came from Fintech StoneCo, when it let go 1,300 employees, or 20% of its workforce. The move came after the payments solution company faced declining credit and debit card sales. StoneCo faces a new set of challenges now — its market cap this year is even lower than it was at the time of the layoff, by a whopping 62%. Both StoneCo and Ebanx have justified these moves as part of "focusing on the core business" and "tightening budgets."

Gympass is perhaps a case study on how to act in a crisis. After laying off 470 people in 2020, the company shifted completely to develop an online network of classes and wellbeing apps instead of its usual in-person experiences. Under founder and CEO Cesar Carvalho's leadership, the organization split into the "defense team" — in charge of cutting costs and administrative stuff and the "attack team" — in charge of developing the online offering. That same year, Gympass, which also operates in Europe and the US, doubled its revenues and secured a $220M funding round from Softbank, doubling its valuation. Adapting in times of disruption and having financial responsibility seems to be the most competitive play for startups in the long term.

We've heard that not all layoffs have been reported. If you know of a company that laid-off people and is not listed on layoffs.fyi, you can enter it here.