The layoffs are a relatively small figure, considering Snyk has more than 1,400 employees listed on LinkedIn as of July 1, 2022. Still, the job cuts and tighter cost controls reinforce a recent trend in the cybersecurity market, where some venture-backed startups have been cutting jobs to:
- Shorten the path to profitability;
- slow quarterly cash burn rates; and
- prepare for a potential "financial winter" -- when raising money and launching IPOs (initial public offerings) will remain difficult.
Snyk Revenue Growth, Cost Management
At Snyk, the cybersecurity company over the past 18 months has grown its customer base by more than 100%; tripled its team size, acquired six companies; and expanded a developer security platform to five products, McKay wrote in the blog.
Snyk raised $530 million in Series F funding in September 2021. The company has raised $775 million since inception, and had a $8.5 billion valuation heading into Q4 of 2021.
Fast forward to June 2022. Now that economic headwinds are looming, "we collectively must embrace an evolved mindset that balances profitability with continued top line growth," McKay wrote in the blog, published on June 30, 2022.
SaaS, Cloud and Cybersecurity Valuations Decline
For those who haven’t been watching Wall Street, fast-growing (but money-losing) SaaS companies have seen their valuations cut dramatically in recent months. ChannelE2E warned that the shift may begin to impact MSP service provider valuations. Among the areas of potential concern: As interest rates rise, it will cost private equity firms more to borrow money to fund MSP acquisitions.
Fast forward to present day, and venture-backed software companies are beginning to witness the valuation pressures. Indeed, multiple venture-backed technology companies have announced layoffs in recent weeks — essentially stating that Wall Street and investors now favor a “path to profitability” over growth-at-all-costs strategies. Those making the path-to-profits pivot include Cybereason, Lacework and Liongard, among others.