Beam Dental has not paused its pace to add 100 jobs this year – one of many Central Ohio technology companies saying they have been buffered from the job cuts and difficulties raising capital for venture-backed startups around the country.
Columbus VC firms that invest in early and late-stage startups told Columbus Business First they have not seen layoffs in their portfolio, citing several factors, including lower operating costs in the Midwest, already conservative hiring practices and the financial cushion from last year's record funding rounds.
In fact, the biggest challenge for most Central Ohio startups remains competing to hire talent, Rev1 Ventures CEO Tom Walker said via email.
"Times like these exemplify the upside of building a company outside of Silicon Valley," Chris Olsen, Drive Capital LLC co-founder and partner, said in a statement. "This is a buyer's market, and the companies that adapt quickly will be able to use this as an opportunity to build market share and emerge more valuable."
Olive AI Inc. has hired more than 250 since the start of the year across the country, a spokesman said via email, and has open positions. Both Beam and Olive are based in Columbus and in Drive's portfolio.
Beam has hired 40 since January and has not altered plans to add 60 more, a spokeswoman said. The dental insurer grew to 300 employees last year while doubling both revenue and membership in its employer-sponsored plans. It's expanding the C-suite, recently adding its first chief product officer, and looks to fill other leadership roles, according to a news release.
Root Inc. (Nasdaq: ROOT) has not made additional cuts since terminating one-fifth of its staff, 330 jobs, in January, a spokeswoman said via email. The digital auto insurer has been cutting expenses and raising rates in response to unprecedented hikes in claims costs due to inflation.
"The early actions taken on reduction in headcount and rate pricing have put us in a safe spot today," said Kelly Ruoff, chief impact officer.
No companies in the Ohio Innovation Fund portfolio have cut jobs, Managing Director Bill Baumel said. Overall the startups hit their first quarter targets for metrics such as revenue and product development, and have kept up the pace this quarter.
"It's ingrained in them to be super thoughtful in expansion and only expand prudently," Baumel said via email. "We typically don't hire a ton of people on 'hope,' but more on a milestone-based plan."
Central Ohio startups raised more than $1.55 billion in venture capital last year, creating a cushion for many.
For example, digital mortgage Lender Lower, which raised $100 million, is focusing more on retaining top talent and hiring for leadership roles than huge recruiting classes, a spokeswoman said, but is not cutting.
"It’s too early to tell what the future holds, but we are advising companies to consider their (cash) burn/runway and staffing plans." Walker said.
What's happening in the tech sector?
Nationally, earlier stage startups seem more insulated from the market turbulence, PitchBook reported this week.
But overall the calm in Columbus contrasts with tech-sector pain throughout the country, as reported by sister publications. Tech stocks of recently IPO'd companies have plummeted, and VCs are slashing valuations.
Among the most notable developments:
- Expected IPOs this year in North Carolina's Triangle region could be on hold.
- This week's cryptocurrency crash battered several San Francisco Bay Area companies. Overall 21 of Silicon Valley's 30 most valuable public companies have lost 20% or more of their market value since the start of 2022. the Silicon Valley Business Journal reports.
- Tech giants aren't immune: Facebook parent Meta Platforms Inc. has slowed hiring.
- The market losses have large firms slashing their VC investing, such as SoftBank.
Will Carvana cuts affect Columbus?
Some of the woes elsewhere could have Columbus ripple effects.
The share price dropped by half for Upstart Holdings Inc. – which had been a profitable bright spot among Bay Area companies that went public the past two years – after the digital lending platform lowered revenue projections because of rising interest rates, the Silicon Valley Business Journal reported.
Upstart's largest office, home to engineering and R&D staff, is in Columbus; company officials weren't immediately available for comment.
Carvana Co. announced the layoff of 2,500 employees this week, the Phoenix Business Journal reported.
The move did not affect the online used car seller's partnership with Root, Ruoff said. Root built custom Carvana-branded insurance that is offered during the car-buying process.
Carvana plans to build one of its car vending machines in the Polaris region.
It bought property on Lyra Drive off Interstate 71 for $6.25 million in March, and completed demolition of the former Magic Mountain early this month. The building permit for the car tower was issued in late April.
The company has no updates at this time, a spokeswoman said via email.
