Upstart pointed fingers toward the adverse economic conditions in the US behind this harsh decision
Artificial Intelligence (AI) based start-up Upstart has handed over pink slips to 7 per cent of the 2,000-strong workforce due to the downfall of loans in the US market. Nearly 140 employees received termination letters, a TechCrunch report pointed out.
In its latest filing with the US Securities and Exchange Commission (SEC), Upstart pointed fingers toward the adverse economic conditions persisting in the country. The firm said that economic challenges and a reduction in loan demand compelled the firm to take the harsh decision.
"Given the challenging economy, we are making this difficult decision for the long-term health of the company. We do not expect any further layoffs, and continue to hire for roles that are strategic to our business," an Upstart spokesperson said in a statement.
Upstart is going through a bad patch this financial year. The share prices witnessed a massive 84 per cent drop in the market. The market cap, which once reached $32 billion, is now less than $2 billion. Moreover, the company reported a fall in its net income and profit margin back-to-back in September and December quarters in 2021.
The technology-based start-ups are facing tough times across the world. Even in India, the inability to get the proper valuation is leading start-ups to take cost-cutting measures. The highly-valued edtech unicorn BYJU’s announced the possible termination of 2,500 employees. Udaan, a famous ecommerce company, attracted the news headlines after laying off its 300-350 on-roll staff. Hence, a pertinent question arises, will the start-ups find an amicable solution to resolve this in the coming months?