Plan B required – Times are tough for cryptocurrency exchanges. The Argentinian exchange Buenbit must part with a large part of its staff, and this is not an isolated case.
Wave of layoffs at Buenbit: nothing to do with Terra tokens?
Buenbit co-founder and CEO Federico Ogue announced and explained in a series of tweets from May 23, 2022, the reduction of its staff. The company puts its “expansion plan” on hold.
He justified this decision by announcing, as context, that “after two decades of exponential growth for the technology industry”, Buenbit was living ” a global overhaul “.
The company then wishes to “focus exclusively on the exploitation of the countries” where it is present “today”. She wants to “maintain an autonomous and efficient structure”.
This change in the strategies of the stock exchange would thus aim to make Buenbit “ stronger and more efficient in what Federico Ogue describes as a “new global context”.
Buenbit’s CEO further clarified that these changes have “not nothing to do with what happened with UST/Terra “. The company is said to have been working on this decision “for months”.
Buenbit nonetheless offered its customers the option to purchase USTs in March 2022. The company had stated that users of the platform could “receive a return of up to 18%” thanks to the staking.
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Difficult context for tech companies: layoffs in the face of cautious investors
Buenbit had raised $11 million in July 2021, in a Series A funding round. Matias Nisenson, managing partner of venture capital firm Myelin VC and investor in Buenbit, attempted to bring clarifications regarding these dismissals carried out by the platform.
He first recalled that startups are financed by investors’ money. They receive shares in the company in exchange.
Investors expect these startups become publicly traded companies one day. They can then, at that time, recover “their money, often with a very high rate of return”.
Matias Nisenson then points out that “the valuations of public technology companies have collapsed”. Some of them would have lost 75% of their value since the beginning of the year “.
This fall would be due to “a number of macroeconomic factors”. Matias Nisenson cites in this context, the examples of “Netflix, Coinbase and MercadoLibre”.
Given this context marked by “public companies” which “are now worth much less”, Matias Nisenson indicates that the “ private investors are afraid “. Venture capitalists would then start “regulating the money they invest”.
“Startups like Buenbit, which hoped for more capital to continue their growth” must then face “a changing macroeconomic situation”.
They would also face investors who are less inclined to take risks and who “prefer companies whose growth is less, but which are profitable “.
The CEO of a startup like BuenBit then, according to Matias Nisenson, two choices :
- “I stay as I am, and I beg someone to give me capital to continue to support my structure. » By choosing this option, the company may end up dismiss 100% of its staffdue to a lack of fresh capital;
- “I’m doing what I have to do to maintain my business without outside capital, even if it means laying off 50% of my team today.” Experienced leaders would choose this solution.
Besides Buenbit, Coinbase also had to review your recruitment plans to be able to face bear markets.
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