Silo, a Bay Area food supply chain startup, has hit a rough patch. TechCrunch has learned that the company on Tuesday laid off roughly 30% of its staff, or north of two dozen employees. Silo has confirmed the headcount reductions, clarifying 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 headcount by almost 30%. We are committed to supporting those team members impacted and have provided severance packages and recruiting support. At the same time, Silo remains dedicated 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, like payment products for accounts payable and receivable automation, inventory management, ledger accounting, financing and more.
Leading up to the layoffs was an issue around a lending product that had hurt Silo’s revenue. A company source confirmed that a customer had become delinquent on their loan, which caused Silo’s banking partner to pause the loan product. Silo then worked with the bank to resolve the problem with the customer, so the facility has the ability to fund again.
While Silo is now able to lend, the lack of payment from that customer and overall pause in lending meant a drop in revenue for that period, leading to the layoffs. For that reason, Silo will likely be careful about ramping up the lending product as it moves forward.
This all took place in recent weeks. However, it’s possible that if Silo had implemented stronger risk management processes, it wouldn’t have faced the default.
In addition, we’re hearing Silo is engaged in M&A discussions as another possible resolution to its current situation. The company had previously engaged in discussions with potential deal partners ahead of its Series C last year, but the fundraise allowed Silo to pause those talks for a time. In recent weeks, those M&A discussions have picked back up again on the back of new growth the company saw last year as well as the possible 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.