Have Startup Layoffs Leveled Off for Good?

The COVID-19 pandemic had considerable impact on the startup community. Those startups with a business model based on human contact—such as ridesharing—had to radically adjust to nationwide lockdowns and new health protocols. Other startups, meanwhile, wrestled with clients terminating contracts and investors suddenly withholding funds.


The net effect was a spike in startup layoffs throughout March and April. But Layoffs.fyi, which has been crowdsourcing startup-layoff data since the pandemic began, shows that layoffs leveled off over the summer and stayed flat into autumn (so far). Check out the chart:

As you might expect, the industries most heavily impacted by COVID-19, including transportation and travel, also saw the highest number of startup-related layoffs over the past several months. Meanwhile, industries such as legal, energy, and security haven’t been nearly as hard-hit, which isn’t a surprise; if anything, startups that specialize in cybersecurity and tech infrastructure have probably seen upticks in business as companies rush to upgrade and modernize their systems.

If the pandemic has illustrated anything, it’s also that the tech industry is exceptionally resilient to massive, world-changing events. Much of this has to do with the fact that, at this juncture, nearly every company in the world regards itself as a “tech company” in some way; even businesses that deal in analog products (an antique store, for example) may rely heavily on everything from e-commerce portals to web design to data analytics. In other words, there’s always a need for technologists—and opportunity for startups that can offer services in new, innovative, and possibly cheaper ways.

For that reason alone, one can hope that the leveling-off in startup layoffs will continue throughout the rest of the year. Indeed, layoffs.fyi’s own tracker shows that many startups across the country are continuing to hire a range of engineers in order to build and maintain products.