From VC favourites to layoff leaders: how fintechs weather economic storms

In 2021, fintech startups raised one-fifth of venture capital globally, yet today they account for the third-largest number of layoffs worldwide

unemployment

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As of July 1, some 3,709 fintech employees — excluding crypto companies — have been laid off, according to TechCrunch. Overall, 36,861 startup employees were laid off during Q2, meaning that fintech aggregated 10.1% of the total. Based on the percentage of laid-off personnel, the fintech space ranked third behind the food and transportation segments, respectively. Rising interest rates and hovering recession makes fintechs adjust to the macro-economic headwinds. 

Besides, the Layoffs.fyi tracker classified mortgage financing companies such as Better.com in the “Real Estate” category. If you take into account the company’s 3,000 layoffs in the first quarter of 2022, the fintech numbers reach 15.4% in H1 2022. 

Klarna’s cutting of 700 employees, or 10% of its staff, and Robinhood’s layoff of 300 workers were among the largest layoff events in the second quarter. 

To better understand the scope of the layoff wave, let’s get back to the 2020 data. Back then, there were 8,715 employees in fintech laid off throughout the whole year. Remarkably, none of the fintech employees was laid off in the entire 2021, according to the same analysis. 

At the same time, the number of fintech startups worldwide tripled in the last two years, rising from over 12,200 in 2019 to 26,000 in 2021. In 2022, there are approximately 30,000 fintech startups globally. Hence, although the number of lay-offs gets seemingly lower, its percentage among other industries is alarmingly increasing. 

SEE MORE:

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Bolt is going to fire about 300 of its employees to increase its profitability

 

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