The first quarter of 2023 saw a rare downturn in startup jobs on the East Coast, with total employment in the sector dropping to levels comparable to the worst days of the pandemic, according to data from early stage venture capital fund Concrete Ventures.
The Atlantic Canadian startup ecosystem shrank by 521 jobs in the first quarter of 2023, with just 18 percent of startups adding staff and 30 percent subtracting. By comparison, the innovation economy added 478 jobs during the same period last year.
General Partner Patrick Hankinson, who compiles his data via LinkedIn, estimates 12,781 people now work in the sector. That figure, down from 13,194 for the third quarter of 2022, is at its lowest level since the third quarter of 2021. Concrete Ventures did not release data for the fourth quarter of 2022.
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“Q1 2023 has proven to be a rough ride for our region,” wrote Hankinson in his report. “Several top startups, which were previously on a growth trajectory, suddenly hit the brakes, and reversed course forcing them to let go of some employees.”
The first sign of trouble may have come last July, when Fredericton- and Miami-based Introhive laid off about 16 percent of its workforce as CEO Jody Glidden said his plan was to aim for "more conservative growth until the recession."
The news at home mirrors a trend of sweeping layoffs from the American tech giants, including Meta, Apple and Google, which last year began abruptly laying off tens of thousands of skilled workers amid a technology sector showing broader signs of economic weakness. In total, Crunchbase estimates that more than 93,000 tech workers lost their jobs in 2022, and another 141,000 have been cut so far in 2023.
The news of job losses comes amid a broader national and international decline in venture capital markets. Data from fintech specialists Carta shows that internationally, startups raised 80 percent less capital in the first quarter than they did for the same period last year, with down rounds comprising fully a fifth of all deals. (A down round is a funding round in which the price per share is lower than the previous round.)
A more employer-friendly labour market could be good news for some founders, who have reported being squeezed by a shortage of skilled workers and ballooning staffing costs.