SeekOut, an eight-year-old recruitment startup utilizing AI for candidate discovery, reduced its workforce by approximately 30% last Thursday, May 16th.
In a recent communication to employees, SeekOut’s CEO Anoop Gupta and CTO Aravind Bala highlighted the company’s financial challenges, stating, “‘“We’ve been in a position where we’re spending roughly $2 to earn $1, leading to significant cash burn in the last fiscal year.” They added, “Regrettably, in order to ensure the company’s long-term sustainability, substantial workforce reductions are necessary.“
This marks the second instance of layoffs for the Seattle-based startup. In October, SeekOut reduced its team by 16 employees, approximately 7% of its workforce at the time, leaving it with about 200 staff members. These earlier layoffs were part of the company’s broader strategy to tighten its operations amidst fluctuating market conditions.
The most recent workforce reduction is positioned as a strategic pivot to focus on fewer, but more impactful, initiatives. This refocus aims to enhance customer value and secure the firm’s competitive stance in the evolving sectors of technology, pharmaceuticals, aerospace, defense, and banking. Sam Shaddox, SeekOut’s general counsel and chief privacy officer, emphasized to TechCrunch that departing employees would receive considerable support during their transition.
Financial insights into the company reveal that in January 2022, SeekOut achieved a valuation of over $1.2 billion following a $115 million Series C funding round led by Tiger Global. At that time, the company experienced a remarkable 300% growth in revenue annually, with its annual recurring revenue estimated between $25 million and $50 million.
However, the recruitment landscape has shifted notably since then. The increase in interest rates has made it easier to find talent, prompting both large firms and startups to reevaluate their financial strategies. This environment has impacted tech giants like Alphabet and Meta, which have also undertaken significant layoffs throughout 2022 and 2023, affecting businesses like SeekOut that specialize in identifying specialized and diverse talent pools.
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