Voluntary departure plans, end of probation, PSE… French Tech is on a diet
Posted on December 15, 2022 at 7:31 am
Winter has come. Investments in start-up companies have fallen massively around the world. And not a week goes by without the announcement of a layoff plan in the United States. Because in Europe, especially in France, it’s a different story. Apart from Meero, which plans a job protection plan (PSE) aimed at eliminating 72 jobs at the start of 2023, the young French in search of funding have not announced any layoff plans.
“We react more slowly than the United States. Companies are preparing their plans for 2023 and considering several scenarios: continue to grow slowly, cut costs a little, or make plans. Therefore, the plans have not yet been approved and implemented,” explains Jean-David Chamboredon, executive chairman of ISAI, a French venture capital fund.
Les Echos polled dozens of French unicorns, and their answers are rather vague about potential workforce cuts: “We’re adapting to the macroeconomic context,” “our teams are complete,” “we’re being cautious”… “Things happen, but this , is taboo,” says Benjamin Bitton, partner at 2C Finance, a financial advisory firm specializing in technology.
If there is no PSE (yet?) – a process regulated by law – there are nevertheless redundancies in the form of voluntary departure plans and non-probationary extensions. France Digitale, which leads the HRD community, acknowledges this trend, but confirms it. “If you add up layoffs and hiring, we still have a positive equation,” says Maya Noel, president of the association, which brings together 1,800 French tech startups and investors.
According to our information, Jellysmack, a platform dedicated to the creation of content on the Internet, is working on a voluntary departure plan in France, for example. The US-headquartered startup has already implemented two layoff plans since the start of the year, but not in France, where social law is more protective.
To have some numbers, you need to look at the evolution of the workforce on LinkedIn Premium (the paid version of the social network). The numbers are imprecise as some employees do not have a LinkedIn account or do not list their current position, but this is a minority. So we can see that unicorn Ankorstore’s workforce has decreased by 13% in six months, with commercial profiles being the most affected (-36%). Despite our repeated calls, the market did not respond to our questions.
“Ankorstore is the startup that symbolizes the extremes of 2021,” says one investor. The startup raised two funds in 2021 (84 and 250 million) and hired more than 400 employees in just two years. For its part, Openclassrooms saw its workforce decline by 7% (-16% engineers) in six months, according to LinkedIn Premium. The most obvious example is Sunday. A fintech that developed a QR code to pay in restaurants cut its workforce by 40% in six months. Last June, Les Echos announced it was laying off 90 people, or about 20% of its staff.
“Some go into the wall”
To cope with the crisis, investors recommend companies to withdraw a certain percentage from their portfolios. “For boxes that work well, more like 10 or 15%. It’s more like intelligent optimization. From 25%, it’s more about trying to save yourself,” says Matthias Flattin, partner at Axeleo.
“10% is not enough. Some entrepreneurs don’t dare to lay off more because they fear the backlash it will cause, but it’s necessary,” says Alan, another investor who expects unicorns like Payfit and Gonto to announce layoff plans. “But they have a lot of money,” he says. According to information available on LinkedIn, unicorns Back Market, ManoMano, and Swile did not register any significant reductions in their workforces, but they hardly hired for several weeks.
“I think we’ll see some nasty surprises in the second quarter of 2023 among unicorns that haven’t decided to cut their budgets in the short term,” said Antoine Moyroud, an investor at Lightspeed Venture Partners. “I invite entrepreneurs to open their eyes. Those who don’t hear that there is a crisis are walking into the wall,” adds Benjamin Bitton.
Profitable startups that are self-funded or have very good performance plan to continue hiring nonetheless. Fintech Spendesk expects between 150 and 200 people in 2023, while Partoo (software for traders) expects 70 new hires next year.