Stingy Funding Flows Force Big Cuts At Birchbox

Birchbox dials back expansion

Beauty on demand firm Birchbox seems to have stumbled into some hard times. The six-year-old startup has announced that it’s laying off 15 percent of its staff and suspending operations in Canada. This latest news follows the announcement that Cofounder and Co-CEO Hayley Barna was leaving the firm.

“The cuts made today will allow us to reinvest in our biggest opportunities and grow even more quickly in the future,” Cofounder and CEO Katia Beauchamp said in a statement on Friday (Jan. 29). “Our vision for Birchbox has always been to build a standalone company, and today’s market demands that we reach profitability this year.”

“We are hitting all of our growth goals and expect to nearly double our shop sales, while still experiencing significant growth in subscriptions in 2016,” Beauchamp continued in the formal statement.

So, if everything is going so well, why the cuts? Funding seems to be the culprit and a lack of access to it, as VCs are rethinking just how much they are willing to throw at startups.

“It’s easy to underestimate what we do,” Beauchamp told Pando Daily, referring to the business model. “There’s no such thing as a beauty emergency. But it is a category that elicits so much emotion.”

All told, venture capital investment in the U.S. is on the decline. The fourth quarter of 2015 saw 981 funding rounds in total, marking the lowest amount since Q4 2011.



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