Vacuum cleaner, a Bay Area food supply chain startup, has managed to tackle a tough situation. TechCrunch has learned that the company on Tuesday laid off about 30% of its staff, or north of two dozen employees. Silo confirmed the headcount reductions, clarifying that the cuts were across the board and not focused on individual departments.
Silo shared the following statement with TechCrunch regarding the layoffs:
We recently made the difficult decision to reduce our workforce by almost 30%. We are committed to supporting these affected team members and are providing severance packages and recruitment support. At the same time, Silo remains committed to serving our customers and the perishables industry at large, and will continue to focus more nimbly on building next-generation supply chain management software solutions.
Founded in 2018, Silo’s platform helps automate the workflows of food and agricultural businesses and later expanded into other areas such as payment products for accounts payable and receivable, inventory management, accounting, finance and more.
Leading to the layoffs was an issue surrounding a lending product that had hurt Silo’s revenue. A company source confirmed that a customer had defaulted on his loan, which caused Silo’s banking partner to discontinue the loan product. Silo then worked with the bank to resolve the issue with the customer so the facility could refinance.
While Silo is now able to lend, the lack of payment from this customer and the total cessation of lending meant a drop in revenue for that period, leading to layoffs. For this reason, Silo will likely be cautious about growing its loan product going forward.
All this happened in the last few weeks. However, it is possible that if Silo had implemented stronger risk management processes, it would not have faced the default.
Additionally, we hear that Silo is in M&A discussions as another possible solution to its current situation. The company had previously engaged in discussions with potential deal partners ahead of last year’s Series C, but the fundraising allowed Silo to put those talks on hold for a time. In recent weeks, those M&A talks have resurfaced due to the new growth the company saw last year as well as the potential need for an exit.
The startup raised $32 million in Series C funding last summer. Investors include Initialized, Haystack, Tribe Capital, KDT, a16z and others.
