How can tech companies grow amid sector downturn? Experts weigh in
Global News
One of the best-performing sectors during the pandemic, the technology sector is now facing a challenging time as a reversal in fortunes has companies tightening their belts.
One of the best-performing sectors during the pandemic, the technology sector is now facing a challenging time as a reversal in fortunes has companies tightening their belts.
Shopify Inc. last month announced it would lay off 10 per cent of its global workforce and would cut spending in lower priority areas and non-core activities. In June, Wealthsimple said it would be cutting its workforce by 13 per cent and would be “laser focused” on its core businesses, namely investing, banking and crypto. And last week, Vancouver-based Hootsuite said it was eliminating 30 per cent of its workforce in a global restructuring.
Other notable tech names that have announced layoffs in recent months include Clearco, Coinsquare, online furniture seller Article, and Thinkific Labs Inc.
Younger businesses trying to drum up financial interest are also starting to see a very different climate than just a few years ago. The Canadian Venture Capital and Private Equity Association says the number of deals and the average deal size were both down in the second quarter compared with the first three months of the year.
Experts say companies need to be aware of the challenging environment but must also find ways to grow in order to come out of the sector downturn in a stronger, more competitive position.
The bump in the road for the industry comes after a long period of growth, expansion and increased demand, which many companies had grown used to.
“It was very difficult to read the signs that things were going to go the other way so quickly,” says Mike Abramsky, executive-in-residence at MaRS Discovery District.
He believes the troubles facing the industry could go on for some time amid rising interest rates, high inflation, recession risks, market volatility and a slowdown in activities that got a major boost during the pandemic like online shopping.
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