Startup Headcount Was Basically Frozen in 2023

Headcount at US startups was basically frozen in 2023.

Started looking into 2023 employment trends across our 40,000 startups - and the initial findings are pretty stark. For the first 9 months of last year, total US headcount across Carta actually shrunk by 400 people.

A little explainer for the chart below:

• The lines indicate the number of employees by category that moved each month. Black line is for new hires, orange line is layoffs, and blue is voluntary departures (employees who left their jobs by choice).

• The bars show the net difference between the black line (hiring) and orange+blue lines (overall departures). This give us a sense of the total increase or decrease in headcount across startups in that month.

If we look at 2019 as a typical year (not shown on the graph), the bars were fairly steady around 10-15K net new hires.

In 2021, startups grew headcount dramatically. By Jan 2022, there were 𝟳𝟬,𝟬𝟬𝟬 𝗻𝗲𝘄 𝗵𝗶𝗿𝗲𝘀 and 𝟱𝟬,𝟬𝟬𝟬 𝗻𝗲𝘁 𝗵𝗲𝗮𝗱𝗰𝗼𝘂𝗻𝘁 𝗴𝗿𝗼𝘄𝘁𝗵 in a single month!

Then hiring declines across 2022. The orange layoff line steadily rises. By the beginning of 2023, hiring has leveled off around 25,000 new hires per month. But layoffs and voluntary departures stay stubbornly high.

Net result? Through 9 months of 2023, startups basically stopped growing headcount. New hires were much more scrutinized, backfills were not automatic, and layoffs remained a sad feature of the startup landscape.

I'm unable to see whether the laid off or voluntarily departed talent ended up taking a job at another startup. I really hope they did. But it's likely that as an industry, tech startups are just smaller than they used to be.

Will 2024 bring a return to headcount growth or will the past 18 months continue to reduce the startup hiring appetite?

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