Quinto Andar, Loft and Facily lay off more than 400 people in a week

Some of the main Brazilian unicorns – as the technology companies that exceed the price of US$ 1 billion are called – made mass layoffs in the last week, something unusual for a market that until last year was heated like almost no other sector in the country. .

There were 159 people terminated at Loft, about 170 at Quinto Andar and, according to reports from former employees, more than 100 at Facily.

The startup and technology sector has been breaking investment records in recent years, and the market has become even more favorable for companies after the digitization of society caused by the pandemic. In recent months, however, changes in the global economy have changed the scenario.

In the case of Loft, the layoffs this Monday (18) were the result of the purchase of CrediHome, a real estate credit company acquired by the unicorn in September last year. Overlapping positions would have been eliminated, although a former employee spoke to Sheet that hiring was taking place in the sector before the layoffs, which were not expected.

In a statement, the company says it will support former employees by providing LinkedIn’s premium service and extending the health plan for two months.

At QuintoAndar and Facily, layoffs affected several sectors.

The real estate rental and sale company, which is going through a moment of internationalization, received US$ 525 million in investment adding the last two rounds, in March and April 2021, when it reached the price of US$ 2.9 billion.

The report of a former employee cites the company’s difficulties in reconciling the internal operation with the expansion that is being carried out in Mexico. The impact of the War in Ukraine on the dollar and on investments was also cited.

In a note, the startup says that rental contracts grew 23% in the first quarter of 2022 compared to the last three months of last year. “We re-prioritized some of our internal initiatives and some teams and functions ceased to exist, generating a reduction of 4% in our team”, disclosed the company.

According to the data platform Sling Hub, which does not point to the latest mass layoffs, the number of employees at the startup had grown by 18% between January and March this year compared to the last quarter of 2021. The company had already gone through a layoff in mass at the beginning of the pandemic, when it cut 8% of the team.

Facily, according to the same base, more than doubled the number of employees in the first three months of this year. The layoffs, however, were the most abrupt. Former employees differ in the number, which can reach almost 200.

In November 2021, the collective purchasing platform signed a term of commitment with Procon after the number of complaints regarding its services reached 150 thousand. At the time, the agency demanded that the startup compensate consumers and reduce complaints by 80%. The company also committed to creating a fund of R$ 250 million for repairs to customers and improvement of customer service.

A month later, Facily became the new Brazilian unicorn after investing US$ 135 million.

The cuts, according to some of the people fired on Tuesday (19), would have started with employees of a contracted consultancy.

Pressure from investors, who have seen the situation of the dollar and interest rates change worldwide since the last contribution, was also mentioned among the reasons for the cuts. The company did not comment on the matter.

It’s an exaggeration to talk about a startup bubble, says analyst

In 2021, US$ 9.4 billion (in December, about R$ 53 billion) were injected into Brazilian innovation, almost 2.6 times what was raised by companies in this segment in 2020 — US$ 3.5 billion.

The recovery of the economy and inflation bring new elements to the investor. After a long period of zero interest rates to encourage an economy that almost stopped with the pandemic, in March, the Fed (Federal Reserve, the American central bank) raised interest rates by 0.25 percentage point, to a range between 0.25% and 0.5% per year. The expectation is that the increase will be repeated in the next meetings of the entity.

The war in Ukraine, which devalued the dollar in a commodity exporter like Brazil, also made the country less attractive to investors, largely foreigners.

The rain of liquidity in the sector aroused the suspicion of a financial bubble among some specialists. In this case, eventual corrections in values ​​and deceleration would not be a surprise.

Dan Yamamura, founding partner of the venture investment fund Fuse Capital, would not go so far as to call the scenario a bubble, but an economic cycle, like the ones that happen in all markets.

“These companies are adjusting to a market that is slowing down,” he says.

He says he sees value adjustments not only in large technology companies, such as Nubank, listed on the New York Stock Exchange, but also in early stage companies — and also in other sectors, as all companies are adapting to the new juncture.

“When US interest rates go up, the whole world is affected,” he says. “There are a number of things that have happened that are a consequence of this post-pandemic world that does not benefit technology companies as it was benefiting before. This does not mean that they will end, but price adjustments are happening.”

In a report on what to expect in 2022, the Distrito platform projects investments of US$ 12.9 billion in startups. The number would represent a growth of 32.9% compared to 2021, the year in which contributions had jumped 177.14% when compared to 2020.