Bay Area food supply chain startup Silo has had its share of challenges. TechCrunch has learned that the company laid off about 30% of its workforce, or 24 employees, on Tuesday. Confirming the headcount cuts, Silo made it clear 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 staff by almost 30%. We are committed to supporting affected team members and have provided severance packages and recruitment support. At the same time, Silo remains committed to serving its customers and the perishable food industry at large and will focus with greater agility on building the next generation of supply chain management software solutions.
Founded in 2018, Silo's platform helps automate workflows in food and agriculture businesses and later expanded into other areas such as payment products for accounts payable and receivable automation, inventory management, ledger accounting, finance, and more.
What led to the layoffs were issues with a loan product that hurt Silo's profits. Company sources confirmed that Silo's banking partners had paused the loan product due to customers falling behind on their loans. Silo then worked with the bank to resolve the customer's issue, allowing the facility to become refinanced.
Silo is now able to make loans, but shortfalls in payments from those customers and an overall lending halt have led to a decline in revenue during the period, leading to layoffs. For this reason, Silo will be cautious about increasing its lending products going forward.
All of this has happened in recent weeks. However, it is possible that the default would not have occurred if Silo had implemented a stronger risk management process.
We're also told that Silo is engaging in M&A discussions as another possible solution to the current situation. The company had previously engaged in discussions with potential deal partners ahead of last year's Series C, but the funding allowed Silo to put those discussions on hold for the time being. These M&A discussions have picked up steam again in recent weeks, fueled by the renewed growth the company has seen over the past year and the need for exits.
The startup raised $32 million in Series C funding last summer. Investors include Initialize, Haystack, Tribe Capital, KDT, and a16z.
