Flush with investor capital, technology startups plan to scoop up software developers, engineers and marketers flooding the labor market following job cuts at Twitter Inc., Lyft Inc. and other large tech employers.
Kathy Zhu said she is lining up candidates for engineering, customer service and other roles at Streamline AI, the two-year-old tech startup she co-founded. They include prospects from “two or three companies that just had big layoffs,” she said.
“There’s an abundance of talent right now, because of these layoffs,” Ms. Zhu said. “A few years ago, there was no way we could’ve attracted candidates like this.”
Millbrae, Calif.-based Streamline AI, which is developing a workflow-automation platform for corporate legal teams, in September closed a $3 million seed-funding round led by Oceans Ventures. Streamline AI has seven employees and hopes to add at least three more by the end of the year, and more positions early next year, Ms. Zhu said.
“There are people on LinkedIn saying things like, ‘I’ve just been laid off at Lyft and looking for work,’” she said.
Lyft, a ride-hailing company, on Thursday said it would cut nearly 700 jobs, or roughly 13% of its staff. Online payments processor Stripe Inc. also announced job cuts Thursday, reducing its staff by some 1,000 positions to roughly 7,000.
Twitter began laying off employees on Friday, roughly a week after billionaire Elon Musk acquired the social-media giant.
Seed and early-stage tech startups, companies that often haven’t brought their products or services to market, have largely been spared the impact of higher interest rates, persistent inflation and disrupted supply chains roiling public technology companies.
With more mature startups in a holding pattern—wary of public market debuts or discount funding rounds—many venture-capital investors are shifting their focus to nascent companies, which aren’t expected to generate returns on investment for another seven to eight years, according to analysts.
Amid sharp declines in funding for later-stage startups, the median deal size for new U.S. startups has held roughly steady this year from 2021 at $2.8 million, with a median valuation of $10.5 million, according to PitchBook Data Inc. Deal sizes and valuations for seed startups hit record highs in the third quarter, the market analytics firm said.
“After years of early-stage companies facing challenges to compete in a very tight and expensive labor market, we are seeing a shift and these companies are in a great position to hire strong talent,” said Maëlle Gavet, CEO of Techstars, which operates accelerator programs and services for new startups.
Arya, a two-year-old automated compensation management startup in New York, aims to use funds from a $3.3 million seed round in May to hire at least four new employees by the end of the year, said founder and CEO Kunal Sarda.
“We’re seeing candidates come through from the FAANGS of the world that we would never have seen before,” Mr. Sarda said, referring to the stock-trading acronym for Meta Platforms Inc.’s Facebook, Amazon.com Inc., Apple Inc., Netflix Inc. and Alphabet Inc.’s Google.
Mr. Sarda said recently laid off tech-sector workers make up about half of the applicants he is considering hiring as product designers, engineers, and sales and data analytics staff.
Still, a growing pool of talent isn’t likely to lead to a hiring boom by startups, said Kyle Stanford, a senior analyst at PitchBook.
“Even well-funded young companies will be more strategic in their hiring practices than we would have seen a year ago,” Mr. Stanford said. Large tech companies cutting jobs because of the souring economic climate “should be a warning to small companies to preserve runway and opt for a sustainable growth, if growth is still possible,” he added.
At the same time, competition for tech workers isn’t likely to go away. U.S. employers across all sectors posted nearly 317,000 tech job openings in October, up by more than 10,000 from September, enterprise-technology trade group CompTIA said Friday.
Write to Angus Loten at Angus.Loten@wsj.com
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