As the lockdown on account of COVID-19 is eventually easing out, several reports reveal how the startup world has faced the atrocities during these tough times. Across the world, there have been layoffs across industries leaving millions of people unemployed. However, several reports reveal that the scenario in Europe hasn’t become as worse as in the other parts of the world as the US.
There are many reasons for this, one aspect that interests us is that most European governments have come forward to help startups and small and medium-sized businesses so that they do not fire staff. They have come up with temporary unemployment schemes or ‘furlough’ schemes such as kurzarbeit in Germany that lets staff join work after the crisis. These temporary layoff schemes provide companies with benefits as they do not have to face the brunt of firing and potential rehiring costs.
Despite these measures taken by the government, and while many startups are hiring, a slew of European tech startups are laying off their employees either permanently or temporarily.
Monzo
Founder/s: Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon, Gary Dolman
Founded year: 2015
Funding: €412 million
Recently, the UK challenger bank Monzo announced that it will lay off up to 120 staff in the UK during the ongoing coronavirus crisis. As per Reuters, this has been revealed in an internal memo written by Monzo’s new CEO TS Anil. Previously, the bank stated that it will come with furlough schemes and pay cuts for employees to avoid layoffs but this no longer appears to be the case as the current economic situation will take time to revive.
While it is one of the leading banks in the UK, Monzo has faced reduced customer card spends during the lockdown, which means less revenue from interchange.
Deliveroo
Founder/s: Greg Orlowski, William Shu
Founded year: 2012
Funding: €1.3 billion
UK-based food delivery giant Deliveroo is active during the COVID-19 crisis and is taking safety measures such as contactless delivery. Despite this, a report by The Telegraph announced that Deliveroo will lay off nearly 15% of its staff, which is over 350 people and furlough as much as 50 employees.
As of now, there is no clarity regarding the positions that will be laid off or furloughed. The reason for the same could be the drop in the demand for delivery in the UK in response to the COVID-19.
Babylon Health
Founder/s: Ali Parsa
Founded year: 2013
Funding: €577 million
Telehealth startups witnessed a boom during the COVID-19 lockdown and this applies to the London-based startup Babylon Health as well. While it was functioning as usual adhering to the social distancing norms during the pandemic crisis and letting users contact a doctor without any risk, Babylon Health has announced that it will furlough 5% of its staff, claims a Business Insider report.
Reportedly, it furloughed 100 staff members in early April but the UK government covers up to 80% of the pay for furloughed staff. On the other side, the company is issuing top-up payments for staff members who are on the lower end of the earning scale to reduce their hardship during the crisis.
Pollen
Founder/s: Callum Negus-Fancey, Liam Negus-Fancey
Founded year: 2014
Funding: €86.3 million
Pollen previously known as Verve is an invite-only marketplace letting people bring their friends to events and share rewards. Operating in events, which is one of the hardest hit sectors during the pandemic, Pollen has axed 31% of its employees, which is nearly 70 people in the US and Canada, reports TechCrunch. In addition, the report adds that around 36 staff in the UK have been reportedly furloughed and up to 10 contractors in the UK have been let go.
To be precise, a 24-member team in Las Vegas and 29 employees in Los Angeles have been axed. Six staff members from Canada have also joined this list. Besides them, 10 remote employees across the US have been axed on account of this pandemic.
Omio
Founder/s: Naren Shaam
Founded year: 2012
Funding: €269 million
Berlin-based multi-modal travel booking platform Omio is also one of the worst hits during the pandemic. And, the temporary layoff schemes in Europe do not help save jobs in the travel and leisure sectors during the crisis. As a result, the travel tech startup Omio has announced to cut down on hiring efforts despite its efforts to cope up. Besides freezing hiring, the company has switched to short-term employment. Boris Radke, the Director Corporate Affairs at Omio told Silicon Canals that, “Majority of Omio is still on Kurzarbeit. During that period we have cut down our hiring efforts to a maximum and only focus on a few strategic positions in the meantime. We hope to resume hiring as soon as global travel kicks back in!”
Flixbus
Founder/s: André Schwämmlein, Daniel Krauss, Jochen Engert
Founded year: 2011
Funding: €510 million
While Flixbus has been performing well and were listed among successful companies in the portfolio of investors, it has witnessed a drop in demand during the coronavirus outbreak. The Munich-based mobility startup has been hit since mid-March due to the crisis. Flixbus buses weren’t operational within the Federal Republic or across borders to and from Germany. Even the train journeys under Flixtrain have also been cancelled completely.
Consequently, the German mobility startup has sent 1,000 employees in the country on short-term work as of April 2020. A few managers from the top management are exempted from this move. Even the founders have let go half of their pay, revealed a statement from the company.
Tourlane
Founder/s: Julian Stiefel, Julian Weselek
Founded year: 2017
Funding: €71.6 million
Another Berlin-based travel tech startup that has been hit due to the ongoing global crisis is Tourlane. This portal handles vacation planning of customers by helping them decide where they want to go, book hotels and trips and more. As there are travel restrictions, there are concerns regarding cancellations and rebooking that has left Tourlane affected.
Last week, Tourlane went ahead, and their spokesperson informed them they’re opting for short-time work. He added, “In order to avoid extensive job cuts, we initiated short-time work for some of the employees until further notice.” Notably, the travel platform employs around 300 people and hasn’t revealed how many employees are affected by the layoff and pay cuts.
Habito
Founder/s: Daniel Hegarty,
Founded year: 2015
Founding: €36.4 million
Habito, a London-based digital mortgage broker has paused recruitment altogether as the sector is facing challenges during the pandemic outbreak. It has frozen recruitment and furloughed staff right now. The startup has helped over 180,000 home buyers with its platform that analyses 20,000 mortgages from over 90 lenders for the best option for users via its proprietary algorithm.
Given that the proptech market is facing a drastic plunge in demand during the current ongoing crisis and people aren’t going to invest in properties anytime soon during the tough times, Habito’s move makes sense.
Treatwell
Founder/s: Maarten Engelen, Laurens Groenendijk, Martijn Rozendaal, Erik Wienk, Jan-Willem van Boeckel
Founded year: 2013
Funding: €139 million
Treatwell is a UK-based online beauty and wellness marketplace that lets customers book appointments for hairdressers, nail experts, and waxbars among others. Also, the platform has reviews from customers who have availed the service. It operates across 50 cities in the Netherlands and Germany.
As the COVID-19 threat persists even after the lockdown restrictions have been relaxed, people are concerned about the spread of infection, which has hit the wellness and beauty industry. The business in this sector has been drastically low in the first quarter and is expected to be low in the coming months too as an aftermath of the pandemic outbreak.
Carwow
Founder/s: Alexandra Margolis, David Santoro, James Hind
Founded year: 2013
Funding: €87.5 million
Carwow was founded as a car review aggregator and became a site to improve the car buying experience. It lets prospective buyers compare offers online and buy them directly from reliable dealers registered with the platform. Buyers can make informed decisions based on price, location, delivery time and dealer ratings.
Recently, Carwow has also frozen recruitment and furloughed staff members as the transport business is facing a lot of challenges imposed by the COVID-19 outbreak right now.
Stock photo from theskaman306/Shutterstock
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