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Thursday, October 6, 2022

Outschool, which racked up series B, C and D in 12 months, lays off 18% of staff – londonbusinessblog.com

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extracurricular, a marketplace for kid-friendly, virtual after-school programs, has laid off 31 people, or 18% of its workforce, CEO Amir Nathoo confirmed to londonbusinessblog.com via text message. The resignation, executed last month, comes after a period of rapid fundraising for Outschool. The company increased its Series B, C, and D over a 12-month period, most recently growing its valuation to $3 billion after hitting a $1 billion valuation just four months earlier.

The capital was used to help Outschool grow from an early stage startup to a growth stage. In October 2021, the company announced that it had attracted more than $100 million in bookings on its platform. Nathoo then explained that staff needed to be mobilized quickly to meet the unprecedented demand; growing from 25 employees to 164. Now the co-founder said, “it’s no secret that market conditions have changed quickly.”

“We recognized the need to be more defensive in the second half of the year,” Nathoo said. “This was one of the hardest decisions I’ve had to make in my career, but we’ve tried to get it right by some really talented and amazing people.”

A spokesperson via email said layoffs impacted all teams, including those at the VP level, “to ensure operations remain optimized across the company.” They also confirmed that 75% of employees have been hired in the past two years.

Outschool did not provide full details of the layoff, but said it was a “very generous package”. The company claims it has a runway of more than three years, and it doesn’t need to increase any time soon.

Still, the layoffs shine a bright light on the challenges of startups in the marketplace and the difficulty of being a growth-stage company that wants to serve children. Months ago, when I asked Nathoo about the collision of incentives between venture and its core clients, he said that “we have been funded with venture capital from the very beginning, and I hope that our actions, and how we do our work, reflect our values. ….the fact that venture capital has not affected the fact that we are a mission-driven company and a values-driven company, and that will not change.”

More recently, Outschool has shifted its focus from individual clients to corporate deals through schools or employer benefits. In the next five years, the company hopes that more than half of the signups on the platform will come from employers and schools.

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