Australian social media tech unicorn Linktree is reducing its global workforce by 17 per cent in the face of the challenging economic environment and tight capital market for tech start-ups.
The redundancies come despite the $US1.3 billion ($1.86 billion) business raising $US110 million in March, from investors such as Index Ventures, Coatue Management, Greenoaks, local fund AirTree Ventures and Insight Partners.
The company is a well-known name in social media circles, providing the “link-in-bio” technology which lets influencers, celebrities, journalists and brands link to their outfits, blogs posts, podcast episodes and more from one place.
Before the staff cuts, Linktree employed about 280 people. The teams affected are understood to be talent acquisition, people and culture, design and marketing.
In a message to Linktree staff, shared in a blog post by co-founder and CEO Alex Zaccaria, Mr Zaccaria said the company had made some “big bets” and hired in line with its ambitions, but this had been predicated on the economic conditions of 2021 continuing in 2022.
Instead, tech valuations have taken a substantial hit in both public and private markets, as interest rates rise and the cost of capital goes up.
“Conditions changed faster than expected and those assumptions I made were wrong. I have many learnings to take into the next phase of building Linktree. That next phase involves narrowing our focus on our long-term strategy by reducing roles that are no longer aligned with our roadmap,” Mr Zaccaria said.
“Friday will be a company-wide mental health day at Linktree. For a company like ours, so focused on culture and camaraderie, this will be difficult news. I don’t expect anyone to be their normal selves.”
The company, which was founded by Mr Zaccaria alongside his brother, Anthony, and their business partner, Nick Humphreys, in 2016, has a host of high-profile users including Selena Gomez and Dwayne ‘The Rock’ Johnson and brands such as TikTok, Red Bull and HBO.
VC funds have been reducing their later stage investments in start-ups as HBO
have slid and companies have had to make choices to extend their capital runways. The latest Cut Through Venture figures show Australian start-ups raised $228 million in July – about two thirds down on this time last year and down on the $409 million banked in June.
Linktree is just one of a growing group of tech start-ups and so-called scale-ups to reduce its headcount.
Other local tech companies to make layoffs include Sendle, Voly, 5B Solar, Brighte, and Eucalyptus. A number of start-ups have also collapsed under the funding market pressures, including grocery delivery players Send and Quicko, as well as property tech company Yabonza and IPO hopeful Metigy.
Globally, a website tracking public reports of tech company layoffs indicates the highest number of redundancies since COVID-19 in the past three months, with 486 tech companies reporting redundancies worldwide.
Linktree is providing the staff made redundant with an average payout of 11 weeks, accelerated vesting of their options, health insurance for US employees until October 31, mental health support for three months, and all their laptops and work from home equipment will be gifted to them.
Its talent acquisition team will also help the former employees try and find new jobs. On Friday, the company will publish an opt-in Airtable with details of the redundant staff in an effort to encourage other employers to snap up the talent.