Israeli unicorn Lightricks, which offers a content creation app, is now the latest in a series of companies in Israel Startup Nation forced to make cutbacks. The company is laying off about 12% of its workforce, or 80 people.
Lightricks joins a number of companies coming out Israel Startup Nation that have either been forced to make cutbacks recently or scrapped plans for an IPO. This trend is largely attributed to the current global inflation crisis and the steps being taken to curb it. The U.S. and Israel have both raised interest rates. That move means there will be less money for future investments so companies of all kinds are contracting, if only temporarily.
Zeev Farbman, Lightricks CEO, alluded to this when he commented on the company’s decision to make the layoffs. “Due to the situation in the markets and the global financial crisis, we need to secure the company’s long-term success while realizing its strategy and maintaining the current financial stability which is why we are currently halting projects that don’t support our strategy and accelerating other projects, as a result of which we are forced to cut some of the positions in the company,” he said.
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Farbman added that the company also plans on cutting marketing and operational costs.
Founded in 2013 by five Ph.D. students, Zeev Farbman, Nir Pochter, Yaron Inger, Amit Goldstein, and a former Supreme Court of Israel clerk, Itai Tsiddon, Lightricks is the creator of award-winning photo and video editing apps. They began with their flagship product Facetune, and since they have built many content creation apps used by millions worldwide.
Since moving to a subscription-based model three years ago, Lightricks’ revenues have tripled year after year. The company’s seven apps have over 160 million downloads worldwide and nearly three million paying subscribers, and have won prestigious awards including Apple’s 2015 App of the Year, Apple’s Best of 2017 and the 2017 Apple Design Award.
In September of 2021, Lightricks hit a valuation of $1.8 billion when it closed a $130 million funding round led by New York-based global private equity and venture capital firm Insight Partners and Hanaco Venture Capital.
Just the other day eToro, the Israeli startup that offers its clients a trading platform, scrapped its planned IPO and will instead try to raise another $1 billion in new funding. The company now expects to have just a $5 – 6 billion valuation, whereas, it originally anticipated more than a $10 billion valuation from its IPO.
Also in June, StreamElements, an Israeli startup that offers interactive tools to help companies manage communities and create revenue for streaming content creators, went through a contraction despite having recently raised a lot of money in funding. The company reportedly sent dozens of its employees termination notices.
In May, Israeli AI startup BeyondMinds informed its 65 workers that the company was closing. This came after an attempt to sell the company fell through.