African genomics startup 54gene has laid off 95 employees, or about 30% of its LinkedIn-sourced 290+ employees. A company's spokesperson confirmed the news after several sources informed TechCrunch of the layoffs last week.
Founded in 2019 by Dr. Abasi Ene-Obong, the three-year-old startup seeks to address the gap in the global genomics market where less than 3% of genetic material used in pharmaceutical research is African. This is despite reports saying Africans and people of African ancestry are more genetically diverse than all other world populations combined.
As one of Africa's most audacious projects, 54gene has received enormous backing from the likes of Y Combinator, Adjuvant Capital and Cathay AfricInvest Innovation Fund (CAIF) and several investors who have invested $45 million in the company, including a $25 million Series B last September; a large chunk of the company's investment goes into its biobank (which now has a capacity of over 300,000 samples) and lab testing centers.
In 2020, 54gene saw an opportunity to make additional revenue during the pandemic as it turned its lab capabilities and re-positioned itself to conduct COVID-19 testing, which spiked in Africa when the company closed its Series A round. It was a big part of the company's operation; at some point, 54gene was one of Nigeria's largest providers of COVID testing.
However, with the significant decline in tests, many 54gene employees recruited in relation to COVID operations had to be let go, the company's spokesperson told TechCrunch. Multiple business functions supporting the COVID business line, including labs and sales departments, were affected. The virtual winding down of that business line led to redundancy in these functions, alongside data entry and sample collection officers who were contract staff. Other operational and technology jobs were affected as well.
"Like so many others navigating this current market situation, we are not immune to having to make adjustments to headcount and our financials, in order to remain competitive within the market," said the spokesperson, adding that the company implemented the staff reduction on August 18.
The company's spokesperson also stated that 54gene will provide affected employees with statutory support, in compliance with local regulations, and in some instances, the biotech startup will provide additional severance pay, as well as health insurance coverage extended for a total of three months.
Layoffs have become the norm as rising interest rates and an extended bull run that swept across private and public markets over the last couple of years, among other factors, combine to make life difficult for tech companies. Amidst recession fears, investors are being stringent with their money, mainly toward growth- and late-stage startups. As a result, startups have had to cut costs and trim down workforces to survive; those who have had some success raising capital have had to adjust to pre-pandemic valuations.
54gene joins a growing list of African startups that have had to resize their workforce in a bear market despite raising several million dollars within the last 18-24 months. Other companies include Swvl, Vezeeta, Wave, Sendy and Marketforce.