Shopify Marketer Postscript Lays Off Employees After Series C - Business Insider

Summary

SMS-marketing company Postscript laid off 43 employees.

The startup works exclusively with Shopify merchants like Brooklinen and Homesick.

SMS-marketing company Postscript laid off 43 employees.

The startup works exclusively with Shopify merchants like Brooklinen and Homesick.

The layoffs came about a week after the startup announced its $65 million Series C.

Postscript, a startup making text-message-marketing software for Shopify merchants, laid off about 19% of its workforce last week, just days after announcing a fresh round of venture funding.

Alex Beller, Postscript's cofounder and president, confirmed the news in a tweet thread posted on Sunday evening. Forty-three people were laid off.

The layoffs happened about a week after the startup announced on June 14 that it had raised $65 million in venture capital. The Series C was led by 01 Ventures with participation from Twilio Ventures, Expanding Capital, m]x[v Capital, Greylock, Accomplice, Elephant, and OpenView.

"This is just the beginning for us," Beller wrote in a blog post announcing the funding round. "While it has the potential to be a massive revenue driver for brands, text is still the greatest untapped channel for a vast majority of companies, and we want to change that — so stay tuned to see what comes next!"

In his tweet thread about the layoffs, Beller said that the Series C had actually closed in the first quarter. Startups must follow certain guidelines when disclosing rounds of funding.

"Since that time, the economic landscape has radically shifted," he tweeted. "As we looked to the future, my cofounders and I came to the difficult decision that we needed to make some changes in order to set Postscript up to best support our customers and chase our customer-facing mission for years to come (helping merchants make SMS their #1 revenue channel)."

Representatives for Postscript declined to comment further.

Founded in 2019, Postscript builds SMS-marketing tools used by more than 8,000 Shopify merchants, including Brooklinen, Homesick, and Native. Its app allows merchants to build subscriber lists, automate text marketing, and create text-message campaigns. Its merchant base and revenue more than doubled between 2021 and 2022, CEO Adam Turner recently told TechCrunch.

Postscript is one of many tech companies to conduct layoffs so far this year. Years of plentiful venture capital and sky-high valuations came to an abrupt halt this spring as the war in Ukraine put pressure on the global economy, rampant inflation squeezed margins, the stock market became more volatile, and it became more difficult and expensive for companies to borrow.

According to Crunchbase News, which has been tracking layoffs in tech, more than 22,000 tech workers in the US have been laid off in 2022.

E-commerce companies, in particular, have struggled as growth has come down from its pandemic highs. Companies like Shopify that saw stellar growth during the days of pandemic lockdown are now contending with more normalized rates of growth as shoppers return to brick-and-mortar stores.

Postscript is also in a unique situation as a startup reliant on Shopify's ecosystem. The Shopify App Store is home to more than 7,000 apps that merchants can install to help with store design, product sourcing, search-engine optimization, marketing, shipping, and more.

The app store is valuable to merchants in that it provides them with tools they need to run their online stores. But it also serves as a launching pad for individual developers as well as startups, some of which have gone on to raise large amounts of venture capital.

Postscript isn't the first company in the Shopify ecosystem to announce layoffs this spring and summer. The delivery company Swyft — which also counts Shopify as an investor — laid off about 30% of its staff on June 15.

Consolidation is also starting to pick up in the Shopify ecosystem. New, venture-funded companies and private-equity firms are acquiring makers of Shopify apps and creating e-commerce-software-focused portfolios.

"In January of 2021, there was so many venture funds that were trying to get into, you know, SMS marketing apps, and just raising and leading rounds for Shopify apps at crazy multiples on the venture side," Dennis Hegstad, an e-commerce entrepreneur, told Insider in May.

Lately, though, he has heard more about app makers selling their startups to roll up companies like AppHub, which bought his app OrderBump earlier this year.

"As someone who is bootstrapped and has not raised money and doesn't plan to raise money, to me, it seems like the timing is right to potentially sell your business if that's something you're interested in," he said, "especially when they're paying fair market multiples for healthy companies."

Shopify Marketer Postscript Lays Off Employees After Series C - Business Insider
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