Snyk is laying off 198 employees, representing 14% of its total workforce, CEO Peter McKay announced in a letter sent to employees on October 24.
Along with the layoffs, Snyk is reducing its spending on global real estate, IT and subscription services and business travel, McKay stated.
Snyk also has made the following organizational changes:
- Exploring ways to improve its go-to-market organization so it can prioritize, scale and meet the needs of enterprises
- Realigning its research and development teams to focus on enterprise and security personas and enhancing the company's developer security platform's depth and capabilities
- Announcing the departures of senior vice president of Market Strategy Aner Mazur and Chief Legal Officer Karyn Smith
Related: Track all technology industry layoffs here.
Snyk's moves are "required to best position (the company) for future growth," McKay noted. Snyk appears to be doubling down on enterprise customers. At the same time, Snyk intends to maintain channel partnerships to drive SMB sales.
A Closer Look at Snyk's Initial Round of Layoffs
Snyk disclosed it made its initial round of layoffs on June 30, 2022. The layoffs impacted 30 employees.
At this time, Snyk made the layoffs as it "needed to adapt to an evolved mindset balancing continued top line growth with profitability and committed to becoming free cash flow positive in 2024," McKay indicated. It also was looking for ways to operate more efficiently to withstand headwinds facing the global economy.
In the 18 months leading up to the June 2022 layoffs, Snyk had achieved the following milestones:
- Growing its customer base by more than 100%
- Tripling the size of its team size
- Acquiring six companies
- Expanding its developer security platform to five products
Snyk has raised $775 million since its inception. The company had a $8.5 billion valuation heading into the fourth quarter of 2021.
Venture-Backed Cybersecurity Startups Experience Valuation Pressures
In addition to Snyk, venture-backed cybersecurity startups such as Cybereason and Lacework have confirmed layoffs in 2022. These layoffs highlight the trend of valuation pressures impacting venture-backed software companies.
Many startup valuations have plummeted in recent months as some investors shifted their preference from hyper revenue growth to reliable profit growth. That investor mind-shift has made it extremely difficult for growth-first startups to explore IPO waters. Rising interest rates and stubbornly high inflation have further pressured startup valuations.
Fast-growing (but money-losing) SaaS companies have seen their valuations drop dramatically in recent months. Meanwhile, as interest rates rise, it may cost private equity firms more to borrow money to fund MSP acquisitions. As such, this may impact MSP service provider valuations
