Layoffs Are Mounting In San Francisco's Tech Segment
San Francisco is at record low unemployment, but concern is mounting about the growing wave of layoffs in the San Francisco Bay Area’s tech industry.
Among the highest-profile layoffs in recent weeks are those at Twitter, which amid news of the Elon Musk purchase deal collapsing let go of 30% of its recruitment staff as the company looks to restructure and cut costs.
Additional layoffs in recent weeks from companies such as Coinbase, Stitch Fix, Sonder, Carbon Health, Bolt and PayPal have illustrated that the tech industry is struggling to keep up with the success of previous years.
Unicorn startup NEXT Insurance, which raised $250M in funding in 2021, doubling its valuation to $4B, announced plans to let go of 17% of its workforce. The company has an estimated employee count of 800, meaning around 150 jobs are expected to be cut, Insurance Business Mag reported.
The company holds office space in Palo Alto but has declined to comment on what this round of layoffs might mean, if anything, for its future in the Bay Area.
San Francisco-based video game developer Niantic, the studio behind Pokémon Go, also announced plans to let go of over 80 of its employees, representing 8% of its staff. Bloomberg reported the news last month. The company also announced that it would be canceling four of its upcoming projects. Its headquarters is located at 1 Ferry Building in the city.
San Francisco-based tech company Unity, which provides the game engine for video games, but does not develop them itself, also made several layoffs at the start of July, as first reported by Kotaku, letting over 200 of its employees go amid cost-cutting efforts.
Kotaku reported that CEO John Riccitiello told employees in June that the company would not be making layoffs and was doing well financially. The cuts are expected to impact employees around the world.
Venture capital funding in San Francisco is down 41% in Q2 from the previous quarter, a Q2 Transwestern report noted.
Derek Daniels, research director for Colliers, said that drop is slightly misleading, due to the overwhelmingly high venture capital activity in 2021. This year’s Q2 numbers still outpace anything the city has seen since Q4 2018, with the exception of 2021, he said, and venture capital-backed companies acquired more than 100K SF in the city last quarter.
Still, office vacancy is on the rise in the region, reaching 20.7% in Q2, and a drop in employment could signal further pain.
CORRECTION, July 12, 4:43 P.M. ET: A previous version of this story miscategorized the Q2 venture capital numbers for this year, compared to 2018 and 2021. This has been updated.