Startup Layoffs Are Finally Truly Declining

Finally, some good startup news: layoffs are really, truly declining.

Won't lie, got a little worried that the trend towards fewer layoffs had reversed during a bad January a couple months ago, but it looks as though that was a blip and not the start of something more serious.

Couple points of good news:

1. Total layoffs across US Carta companies fell to under 7,000 in April, the lowest single month since April of 2022.

2. Layoffs are down across effectively every industry we track, from SaaS to Healthtech to Consumer.

3. The ratio of employees leaving by choice vs those who were laid off is also getting more healthy. In April 2024, 60% of departing employees did so by choice. For most of 2023, that ratio was closer to 50:50.

We aren't completely back to normal, however. Couple sour points still remain.

First, the absolute number of employees leaving their jobs by choice is still falling, albeit much more gently than the decline in layoffs. This suggest that startup workers are not yet fully confident in making the next move to a different company.

Second, hiring is still pretty slack. Q1 2024 hiring was slightly higher than the total from Q4 2023 but not nearly high enough to give us any real optimism yet. And the net hire figure (total new hires - total departing employees) is muddling along around zero most months.

Does this indicate that most tech startups have "rightsized" their employee base? I'm skeptical that each company will have found the perfect headcount state, but it seems like the drastic cuts of the last few years may be over.

Fewer layoffs is better than more layoffs — I'll take it.

#cartadata #startups #layoffs #startupemployees