Two cybersecurity vendors that recently boasted of raising hundreds of millions of dollars at unicorn valuations have confirmed staff cuts as the turmoil in the capital markets start to wreak havoc on late-stage startups.
The two vendors — OneTrust and Cybereason — banked a combined $575 million since 2020 and have deliberately boasted about billion-dollar valuations in an expanding cybersecurity market. Now, with macro economic headwinds on the front-burner, the layoffs and pre-emptive belt-tightening at these two well capitalized startups suggest the industry could be in for a long economic slog.
OneTrust chief executive Kabir Barday acknowledged the obvious in a public note confirming layoffs affecting 25 percent of its workforce (950 employees were let go).
“I know this news is surprising, especially as you heard last month that the business is on track with record quarters and increasing customer demand. However, capital markets sentiment shifted to a more balanced approach between growth and profitability, and at this time, we have decided the best course of action is to reorganize to position OneTrust for continued long-term success,” Barday said.
“While evaluating all potential scenarios created by these changes, it is critical to be proactive, and this [workforce] reduction is the solution we chose to help us meet the new challenges ahead of us,” he added.
OneTrust, which hawks privacy, security, and data governance technology, raised $300 million in a Series C round in December 2020 that came with the public boast that the company’s valuation had reached a whopping $5.1 billion.
To date, OneTrust has raised approximately $925 million from several prominent venture capital investors and the company’s CEO says its customer base has crossed 12,000 organizations.
Like OneTrust, Cybereason also did the media tour recently to boast of its fund-raising prowess and multi-billion dollar “unicorn” valuations but macroeconomic headwinds have forced the endpoint detection and response (EDR) vendor to slash 10 percent of staff (100 employees).
The Israel-based Cybereason, which recently completed a Google Cloud partnership that came with a reported $50 million investment from Google, has raised a total of $750 million in funding.
In an interview with CNBC, Cybereason chief executive Lior Div said the layoffs and cutbacks were necessary to navigate capital markets turbulence. Cybereason was on track for an IPO after securing a $3 billion valuation in its latest round of financing but the fast-changing landscape has killed those plans and Div said the company proactively decided to reduce expenses and preserve cash.
In addition to OneTrust and Cybereason, so-called ‘unicorn’ Lacework also cut 20 percent of its workforce (250 employees) and contractions have hit home at Mozilla (250 employees laid off) and the Tor Project.
Analysts and security leaders polled at this week’s RSA Conference in San Francisco are expecting to see more layoffs as entrepreneurs look to hoard cash in an uncertain funding climate.