BOULDER — Just weeks removed from closing a nearly $19 million fundraising round, employee-recognition and rewards platform Bonusly laid off 30% of its workforce.
The job cuts, which company leaders have not specifically quantified and were first reported by the Denver Business Journal, come amidst a period of decreased demand and increased pressure from investors.
“We’re in a dramatically different economic reality here in 2023 than we were at the start of the pandemic or in 2021.”
“Since the pandemic, there was a ton of money pumped into the economy, and interest rates were held at zero,” Bonusly co-founder and CEO Raphael Crawford-Marks told BizWest Friday. “That created an unprecedented demand for business software, which is what we sell. As a result, we grew really quickly and hired ahead of that growth.”
Leaders at Bonusly, a trade name for Smartly Inc., must now navigate how “we shape this company so that it will be successful in what will likely be a pretty long period of downward or sideways background conditions,” Crawford-Marks said.
While Bonusly’s layoffs were “completely unrelated” to last week’s Silicon Valley Bank collapse, the bank failure highlights the uncertain funding environment for startups, he said.
“I think the funding environment is going to be really tough for the next two to three years, or maybe longer,” Crawford-Marks said. “… There are a ton of companies funded in 2021 and 2022 who are going out to get their next round of capital later this year or in 2024. There’s going to be an enormous cash-crunch for those startups.”
In a high-interest rate environment, “for (investors) to take that capital and put it towards a 10-year bet on a startup, the bar gets a lot higher for what that startup has to return,” he said.
Still, Crawford-Marks said that Bonusly is “still growing, but we are not growing as fast as we were in 2021.”
Bonusly’s business model seeks to emphasize and reward highlight connections.
Through Bonusly, employees can recognize their peers, rather than have that recognition come only from the top down. Recognized employees can receive small bonuses that are connected to company core values and add up to rewards that can be redeemed for cash or gift cards at major retailers. Or, recipients can donate funds to nonprofits in Bonusly’s rewards catalog.
Last year, Bonusly users gave more than 2.7 million bonuses in 114 countries, and Bonusly users have contributed almost $250,000 to charity, the company said in an early March press release.