Silo, a Bay Area food supply chain startup, has hit a rough patch. JS has learned that the company laid off about 30% of its workforce, or more than 20 employees, on Tuesday. Silo confirmed the staff reductions and clarified that the cuts were across the board and not targeted at individual departments.
Silo shared the following statement with JS regarding the layoffs:
We recently made the difficult decision to reduce our workforce by almost 30%. We are committed to supporting affected team members and have offered severance packages and recruitment support. At the same time, Silo remains committed to serving our customers and the perishables industry at large, and will continue to more nimbly focus on building next-generation supply chain management software solutions.
Founded in 2018, the Silo platform helps automate the workflows of food and agriculture companies and was later expanded into other areas such as payment products for accounts payable and accounts receivable automation, inventory management, general ledger accounting, financing and more.
In the run-up to the layoffs, there was an issue surrounding a credit product that had hurt Silo's revenues. A company source confirmed that a customer had fallen delinquent on their loan, forcing Silo's banking partner to pause the loan product. Silo then worked with the bank to resolve the problem with the customer, so that the facility can receive financing again.
Although Silo is now able to make loans, that customer's lack of payment and the overall disruption of lending for that period caused a decline in revenues, leading to the layoffs. For that reason, Silo will likely be cautious about ramping up its credit product as it develops.
This all happened in the last few weeks. However, it is possible that if Silo had implemented stronger risk management processes, it would not have encountered the standard.
Additionally, we hear that Silo is involved in merger and acquisition talks as a possible solution to the current situation. The company had previously held discussions with potential deal partners ahead of its Series C last year, but the fundraising allowed Silo to pause those talks for a while. In recent weeks, merger and acquisition talks have picked up again thanks to the new growth the company saw last year and 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.
