TechCrunch confirmed today that BounceX (the firm is rebranding this year) has executed layoffs and salary cuts in the wake of recent COVID-19-led economic disruptions.
Many startups are undergoing staff cuts as the domestic and global economies slow, making individual reductions less newsworthy as the layoff tally rises. However, as BounceX is a company we've recently highlighted for its growth and capital efficiency, its own cuts are worth noting.
TechCrunch was tipped concerning the BounceX staff cuts and salary reductions earlier today, events that the company confirmed this afternoon. Our original tipster pegged the cuts at around 20% of staff, with pay cuts for the rest of its denizens.
The company confirmed the existence of salary cuts and layoffs, but did not affirm our figures. Here's BounceX on its hard day; the firm confirmed pay cuts via a spokesperson separately from this comment:
COVID-19 has hit our client base really hard, especially if they had significant retail presence. In order to accommodate clients and help stabilize our business & their businesses, we made the immensely difficult decision to move forward with a reduction in force. While we expected over 30% growth this year and adding 150 new roles by year end, we were forced to consolidate roles in order to do everything we could to take care of as many of our people as possible and continue to help our clients get through this.
It is not a surprise that BounceX was planning revenue growth and 150 new roles; the company recently crossed the $100 million ARR threshold, an event that TechCrunch covered as part of our long-running series focused on companies that reach the revenue threshold.
Indeed, in February, when BounceX shared the milestone, the firm also announced a rebrand, stating that it would change its name to Wunderkind. As you can read from the name, BounceX was feeling good at the time, looking to the future, proud of its growth and track record of efficient capital use.
As TechCrunch wrote at the time:
Wunderkind has been super efficient to date, with [CEO Ryan] Urban telling TechCrunch that “the amount of equity [his company has] actually put to work is probably sub-$35 million,” with less than $50 million in equity capital raised. The company also has debt lines that it can use, the CEO noted.
Given its history of conservative capital management, it doesn't seem likely that BounceX is in existential danger after its layoffs. The company's debt line -- though we don't know anything about its covenants -- could provide more cushion. But its quick turnaround in fortunes shows how fast things can change.
The impact of COVID-19 on BounceX shows that no company, no matter how successful they were in February, is safe in April. Heck, TripActions was crowing about a huge new debt facility it secured right before COVID-19; the firm has since pared staff as well.