SeekOut Lays Off 30% of Workforce Amid Financial Struggles
SeekOut, an AI-driven recruiting startup, has laid off about 30% of its workforce, marking its second round of layoffs within a year. This decision was announced in a letter to employees by CEO Anoop Gupta and CTO Aravind Bala, who cited significant cash burn and the need to place the company on a sustainable financial trajectory as primary reasons for the layoffs.
Background and Financial Struggles
Founded eight years ago, SeekOut leverages artificial intelligence to help companies find and recruit hard-to-find and diverse candidates. Despite its innovative approach, the startup has been facing financial difficulties. According to the letter, SeekOut has been spending approximately $2 to earn $1, resulting in substantial cash burn in the last fiscal year.
In October, SeekOut had already reduced its workforce by 16 employees, which constituted about 7% of its staff at that time. Following these cuts, the company had around 200 employees. The recent layoffs are a strategic move to refocus on fewer initiatives that will deliver the most value to customers and strengthen SeekOut’s financial position.
Market Valuation and Revenue Growth
In January 2022, SeekOut was valued at over $1.2 billion following a $115 million Series C funding round led by Tiger Global. During this period, the company’s revenue was growing at a remarkable rate of 300% per year, with annual recurring revenue (ARR) ranging between $25 million and $50 million. Other investors include Madrona Venture Group, Mayfield, and GV.
Impact of Market Changes on Business
The recruiting landscape has evolved significantly, especially in technology sectors where talent acquisition has become easier due to rising interest rates and a heightened focus on profitability. Major tech companies such as Alphabet and Meta have conducted massive layoffs throughout 2022 and 2023, impacting SeekOut’s business model. These changes have reduced the demand for SeekOut’s software, which is designed to help large companies in technology, pharmaceuticals, aerospace, defense, and banking find hard-to-find talent.
Company’s Strategic Response
Sam Shaddox, SeekOut’s general counsel and chief privacy officer, emphasized that the layoffs are a strategic measure aimed at enhancing the company’s financial stability and competitive edge in talent acquisition and management. Departing employees are receiving extensive support to aid their transition.
The restructuring underscores the challenges faced by startups in maintaining growth and financial health amid a shifting economic environment. SeekOut’s leadership remains committed to refocusing on initiatives that will deliver the greatest impact to their customers and strengthen the company’s market position.
