CRE Tech Companies Are Laying Off Staff Too

In the face of worries about a potential recession, layoff news, which had fallen from daily attention since the worst of the pandemic, is back. That’s particularly true in the once-thought-invulnerable tech sector.

Layoffs are back in force and among corporate royalty: Netflix, Meta (formerly known as Facebook), Tesla, Coinbase, PayPal, Uber, Peloton, and Carvana. Companies with big backing, big sales, and now, big worries. 

Smaller companies aren’t immune either, especially when getting advice from powerful forces like startup accelerator YCombinator, as TechCrunch reported after getting a copy of a letter from the firm to its investments. 

“If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn,” TechCrunch quoted the letter. “Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan.”

Sequoia Capital, a major venture capital firm, told investments to “avoid the death spiral,” as The Information reported.

Such belt-tightening advice usually translates in part to reducing headcount. That’s happening at a number of proptech and real estate-oriented fintech startups. Given CRE’s traditional slow overall adoption of new technology, it’s unclear how urgently the industry needs some of the companies potentially impacted.

Proptech firm Latch, which enables people to unlock their doors from a smartphone, reportedly has had three rounds of layoffs since early April. By late May, that became 28% of the company’s full-time employees, as a press release noted.

Rhino, one of the companies trying to replace traditional security deposits, reportedly laid off more than a fifth of its staff back in February, according to The Real Deal.

Ghost kitchen firm Reef was on the site Layoffs.fyi for having cut 5% of its workforce, 750 people, last month. Online brokerage Side, a year after attaining unicorn status (valuation of at least $1 billion), laid off 10% of its employees, said Inman. In March, homebuying startup Knock sent off half of its staff and forgot IPO plans, according to Bloomberg.

The most notorious example is mortgage lender Better.com, as the New York Times described. In late December 2021, the CEO gained notoriety for firing more than 900 employees on a Zoom call. A few months later, another 3,000 were gone.

Not all real estate-related tech startups are having such troubles, but the examples should send CRE pros on a due diligence quest, whether before (or even after) investing in a company—or trusting a firm as a vendor. Because, with markets and the economy where they are, security and stability are awfully attractive.