More Canadian technology startups have made the difficult decision to cut costs or close down amid a sector-wide downturn.
Interest-rate hikes to combat rising inflation have cooled investor interest in tech, making it tougher for startups to secure venture capital (VC) funding and increasing the cost of borrowing. While overall unemployment has remained low, the tech industry has seen mass layoffs, public stocks tank, VC levels fall, and the valuations of privately-held firms drop.
In the past seven months, nearly 225,000 tech company employees have been laid off—27 percent more than during all of 2022.
Amid these conditions, some companies have shed staff to save cash and chase profitability, pivoted, weighed costly down rounds or debt financings, sought creditor protection, sold for pennies on the dollar, or stopped operating altogether.
Just this week, Silofit officially closed its doors and Fable announced that it laid off employees. Top Hat has also reduced its headcount, BetaKit has learned. This trio is far from alone.
Small and large, emerging and established Canadian tech companies across a wide variety of sectors and regions have felt the impact of these market conditions, from Tiptap and Omnirobotic to Paper, Dapper Labs, Loopio, Pillar, and Billi.
Silofit’s closure and Top Hat and Fable’s cuts add to what has already been an especially tough year for tech layoffs. Per Layoffs.fyi, at publication time, more than 920 tech companies globally have shed nearly 225,000 employees since the beginning of January. In only seven months, this 2023 total already exceeds the 165,000 tech workers laid off during all of 2022.
Silofit, which converted small office spaces into private micro-gyms, offered clients on-demand access to a network of workout spaces, trainers, and programming across Montréal, Toronto, and Miami through its app.
In an Aug. 2 LinkedIn post, Silofit co-founder and former CEO Wilfred Valenta announced that five years after its launch, the company is shutting down. In his post, Valenta attributed the decision to a few contributing factors that “ultimately proved insurmountable” for Silofit: “prolonged” COVID-19 gym closures, shifting consumer behaviour, and increased competition. Valenta declined to provide further comment to BetaKit.
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Founded in 2018 by Valenta, former engineering director Adrien Caranta, and ex-senior product designer Johan Rosell, Silofit—which at one point had 50 employees—raised a total of around $20 million CAD from a group that includes Whitecap Venture Partners, Alate Partners, Courtside Ventures, David Grutman, and Fitt Ventures to “reimagine the way people engage with fitness.”
“Together, we paved the way for a new era of on-demand fitness, creating a network of accessible micro-gyms that allowed individuals to exercise conveniently, flexibly, and efficiently,” argued Valenta in his LinkedIn post. But the company’s timing made things difficult, as the pandemic hit Silofit and the gym industry hard.
“We ended up where we did, not because of a lack of effort but because ultimately we were a part of one of the largest shifts in our generation,” wrote Valenta, who added that he plans to take a break for now but will be back “in the ring again soon.”
Meanwhile, amid current market conditions, other Canadian tech companies have reduced or refocused their spending and shed staff recently, including Toronto-based EdTech firm Top Hat and accessibility tech startup Fable.
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A Top Hat spokesperson told BetaKit that Top Hat laid off 42 employees, or less than 10 percent of its team, as part of a “workforce optimization initiative.”
“Optimizing our workforce positions us to invest our resources in strategies and innovation that have the highest impact on value for our customers and growth for the business,” added the spokesperson, who did not share further information regarding the rationale for the cuts.
According to LinkedIn, Top Hat currently has 561 employees. Based on that headcount, 42 people represent just over seven percent of Top Hat’s staff.
Silofit’s closure and Top Hat and Fable’s cuts add to what has already been an especially tough year for tech layoffs.
Top Hat, which sells courseware used by millions of students across 750 North American colleges and universities, most recently closed a $130 million USD Series E round at a half-a-billion valuation from Georgian Partners and has made some acquisitions since then.
Fellow Toronto-based, venture-backed tech firm Fable, which helps companies develop products designed to be accessible for people with disabilities, has also reduced the size of its team, laying off 13 employees.
Fable co-founder and CEO Alwar Pillai disclosed the cuts in a Jul. 31 LinkedIn post. Pillai did not disclose why the company made the cuts or what percentage of its staff was affected. Fable has not yet responded to a request for comment from BetaKit.
Per LinkedIn, Fable currently has 146 employees. Based on that headcount, 13 people represent about nine percent of Fable’s staff.
Despite the cuts, Pillai wrote, “Our commitment to our mission, our customers, and our community is as strong as ever,” adding, “There is lots of work to be done to make our digital world inclusive, and Fable is very much focused on doing that work.”
Feature image courtesy Silofit.
