In mid-2021, Miguel, a 26-year-old living in Mexico City, had been working as a delivery driver for Uber Eats and DiDi when a friend told him that the Colombian grocery startup Merqueo was hiring. Just a few months before, in April, Merqueo had launched 10-minute delivery in Mexico and announced it would be investing $60 million in the country. The job promised stable hours and benefits — something Miguel had never had before with a delivery platform. He started work in January.

In early June, Miguel — who asked to use a pseudonym to speak candidly about his experience — and other Merqueo delivery drivers were invited to a video call with an executive. They were told that the company would be exiting Mexico and that they would be out of a job that week. 

“I thought they were growing this year … it was all a little weird and very sudden,” Miguel told Rest of World. “Now I have to worry about bringing food home.”

Merqueo did not respond to a request from Rest of World for comment. 

Miguel is one of tens of thousands of tech company workers around the world, from delivery drivers to software engineers, who have been laid off as the industry adjusts to an increasingly difficult operating environment. According to the project, which tracks retrenchments at tech companies, almost 100,000 startup employees across the world have lost their jobs since the beginning of March 2022.

The causes of the global layoffs are rooted in the broader economic environment. Inflation has put pressure on consumers, reducing demand for tech services and products. A rout in technology stocks since the start of the year has wiped more than a trillion dollars off the valuations of tech giants and billions off the balance sheets of major investors, such as the Japanese mega-fund owner SoftBank Group, reducing their ability and appetite for supporting loss-making startups. Rest of World interviewed investors, founders, and analysts across Asia and Latin America, to understand how this is impacting workers on the ground. While some see opportunities in the chaos engulfing the industry, most expect 2022 to be a brutal year for emerging market tech, as companies cut their expansion plans and reduce headcounts.

“Everyone should be laying people off,” Shu Nyatta, a venture capitalist and former managing partner of SoftBank’s Latin America Fund, told Rest of World, “for the simple reason that everyone should be extending their runway as much as possible without fundamentally hurting their business.”

For the past half decade, massive global investors, including SoftBank and Tiger Global, have opened their wallets to emerging market tech, helping to create regional giants, such as the Argentinian personal finance app Ualá, the Indian payments platform Paytm, and Indonesian super app GoTo. In 2021, venture funding to Asia hit $165 billion — 50% more than in 2020, according to data from Crunchbase, the research site. Funding to Latin America rose 300%, to $19.6 billion.

But the global economy is now facing a slowdown, due to a confluence of factors, including late-pandemic supply chain disruptions and the Russian invasion of Ukraine, which has disrupted fuel and food supplies. Stock markets have fallen precipitously. The S&P 500, a benchmark of large U.S.-listed companies, has fallen more than 20% since the start of the year. The technology sector has been particularly hard hit. The NASDAQ-100 Technology Sector Index, which tracks the performance of tech stocks, has dropped more than 33% since last December, as investors look nervously at tech companies’ balance sheets.

“That money you thought was going to last a year and then we’d do another financing? Now it needs to last two years.”

“They’re higher-growth companies — often they’re borrowing capital at very high prices, and their cash flows are uncertain,” Terry Kramer, an adjunct professor of technology management at the University of California, Los Angeles, told Rest of World. A model built on burning money to grow fast was fine when investors were flush with cash. In more straitened times, it looks like a liability.

Large U.S.-listed tech companies, including Meta, Alphabet, and Amazon, saw more than $1 trillion wiped off their market value in just one three-day period in May. The India-based food delivery platform Zomato has dropped nearly 50% since its IPO in July 2021; the Brazil-based fintech company Nubank has dropped around 65% since its IPO in December 2021. Singapore-based superapp Grab had a difficult debut when it listed in December but fell further in May after disappointing results.

Large tech investors have suffered as a result. In May, SoftBank reported losses of $20 billion at its Vision Fund investment unit. Tiger Global, another huge tech investor, has seen the value of its flagship hedge fund fall more than 50% since the start of the year. That, in turn, means they have less money to invest in startups.

“A lot of those investors who sit on the boards of the smaller tech companies are telling their tech companies: That money you thought was going to last a year and then we’d do another financing? Now it needs to last two years,” Kramer said.

These impacts, while global, will probably be more severe in emerging markets, as investors pull back from assets that are perceived as being riskier. “Usually the first reaction of the foreign investor is to withdraw,” Claudia Zeisberger, a professor of entrepreneurship and family enterprise at the European Institute of Business Administration (INSEAD), told Rest of World. “In times of crisis, you’re just looking for things that are a bit more comfortable to you — closer to home.”

Companies who were hoping to add to their financial reserves by going public have had to curb their ambition. Nyatta, who helped to found SoftBank’s Latin America Fund in 2019 and left in April to start a new fund called Bicycle, pointed to a long list of Latin American companies that he anticipated would go for IPO in 2022 but were forced to change their plans, from the Mexican used car platform Kavak to the Brazilian exercise company Gympass. “All those companies could have gone public this year,” he said. “And now the markets are closed, and the pricing is very different.”

In Indonesia, online travel site Traveloka canceled its plans to go public via a special-purpose acquisition company and is now pursuing a nearly $200 million private fundraising instead, according to Bloomberg. 

Companies that previously relied on investors’ cash to sustain their growth now need to fix their unit economics, which means cutting costs — and jobs. In data provided exclusively to Rest of World, Blind, an anonymous professional networking app, found that tech employees in emerging markets were anticipating turmoil. Blind tracked discussions in markets outside of Australia, Canada, Europe, Israel, and the United States and found that mentions of “hiring freezes” increased 67 times from April to mid-June, compared to the same period last year. Discussions of layoffs increased fivefold.

The sudden reversal of fortunes has caught some tech workers by surprise. In Bengaluru, Pranav — who asked to be identified using a pseudonym to avoid a backlash from his former employer — told Rest of World that he joined the gaming-contest company Mobile Premier League (MPL) in November 2019. The company, which hosts online casual gaming tournaments and fantasy sports competitions, had a huge user base in India and had recently expanded into Indonesia. Pranav joined the company to help it scale further and start monetizing its growing user base.

The pandemic was a boon for the company, with people playing more in lockdown, and MPL’s revenue grew from about $256,000 in 2019 to nearly $64 million in 2021, as the startup’s valuation soared to $2.3 billion. In July 2021, the company announced it would increase its headcount by 50% in Indonesia.

MPL struggled to build revenue-generating products in Indonesia, where some forms of gambling are banned, but the company continued investing for three years. Then, in May 2022, it suddenly shuttered its Indonesia operations. Pranav was laid off. “I think the ultimate reason for which it shut is that they don’t see the business becom[ing] profitable in the near future — at least in the next two to three years,” he told Rest of World.

MPL did not respond to a request for comment.

Since May, more venture-backed companies in India and Indonesia have laid off staff. The Facebook-backed e-commerce company Meesho, which raised $570 million in 2021 and expanded into grocery delivery with plans to reach 200 cities, recently laid off 150 employees in that business. Bengaluru-based Unacademy, an online learning platform that thrived during the pandemic, has shuttered its primary and secondary education business. In May, Unacademy’s co-founder Gaurav Munjal sent a candid email to staff, in which he said he expected funding to be scarce for the next 18 months. “We must survive the Winter,” he wrote. Several other edtech startups including Byju’s, Vedantu, and Lido have laid off thousands of employees, as the pandemic-driven boom in home learning comes to an end.

Layoffs and the reining in of expansion plans are correlated with a shift at venture capital companies,  which are no longer focused on growth but on businesses’ sustainability. The average size of venture capital investments in Indian startups declined by half between May and March 2022, according to data from Fintrackr, a startup market intelligence platform.

In Indonesia, some analysts told Rest of World that the impact of the funding crunch and market conditions has been exacerbated by the fact that the sector was overheated in the first place. Indonesian tech companies raised more than $6 billion from private equity and venture capital firms last year, and nine companies reached billion-dollar valuations. In the last decade, VCs have injected over $60 billion into 12,000 startups across Southeast Asia, creating almost 50 unicorns — half of which were minted last year, according to data from Tech in Asia. 

“Startups must focus on efficiency and profitability to sustain their business.”

Harry Su, managing director of Jakarta-based financial advisory group Samuels International, said that VCs investing in the region had expected growth rates similar to those of U.S. startups, leading them to invest with U.S. valuations. “U.S. startups often possess scale globally, so they can justify the valuations. However, Indonesian startups do not have the ability to scale globally, creating valuations that outstrip performances,” Su said. He added, however, that founders were also as guilty, as “they thirst for more funding and greater exit valuations.”

Since the start of the year, around 1,300 people have been cut from their roles at 10 Indonesian startups, according to Tech in Asia. Among the casualties are staff at former high-growth companies, including Halodoc, a health-care startup whose investors include GoJek — the ride-hailing and food delivery platform that is now part of GoTo — and the Singaporean national investment fund Temasek. 

Since May, dozens of Halodoc staff have been told they should look for other jobs, according to two former employees, who said that no clear reasons were given for their employment terminations. 

A Halodoc spokesperson denied there were mass layoffs at the company, saying that the departures were the result of routine performance evaluations. In an internal letter sent out to employees in early June, seen by Rest of World, CEO and co-founder Jonathan Sudharta said hypergrowth was no longer the main priority, as the world faces a new challenge caused by economics and geopolitics, and that “this condition, like it or not, will have an impact on us as part of the global economy.”

Other companies have had to suddenly reverse their expansion plans. Two months ago, Rahim, a manager at the Indonesian startup Lummo — who asked to be identified using a pseudonym, to avoid jeopardizing his future employment — advertized that the company was hiring. The sales team of the Jeff Bezos–backed company had wanted up to 50 more people this quarter, according to Rahim, who had joined only six months earlier. In early June, Rahim said he was notified that he would be laid off. “There was no notice. There was an email in the morning and then a town hall [where the layoff was announced],” Rahim told Rest of World. Lummo declined to comment.

Founders said that in the current economic conditions, layoffs and retrenchments are inevitable. “What we can say is that in this macroeconomic condition, startups must focus on efficiency and profitability to sustain their business,” Rohan Monga, CEO of Indonesian edtech startup Zenius, told Rest of World. Monga said that Zenius has let 200 of its 900 workers go but that he’s hopeful of a recovery. “This is not the end of the startup era,” he said. “Everything will become digital eventually.” 

Amid the gloom, some venture capital investors told Rest of World that they think the current downturn will create opportunities, particularly for smaller, more flexible companies.  

Federico Antoni, the founder and managing partner of the Mexican VC firm Allvp, told Rest of World he thought the rush of new unicorns in Latin America over the last few years had actually been detrimental to the region’s tech sector, where “macroeconomic uncertainty is something that is a feature rather than a bug.” Managing unicorns through a downturn is far harder than managing smaller companies, Antoni said. “The unicorn status has suddenly become a burden.”

Antoni and ex-SoftBank partner Nyatta both say that the withdrawal of the big, global investors has opened up the field for them — smaller, regionally focused funds. “We’re going to have a more focused entrepreneur class and less tourists coming here to become rich and famous super fast and easily,” Antoni said.

Even so, local investors tend to focus on early stage funding, with startups in emerging markets relying on bigger VC firms for growth capital, and the days of — relatively — easy money are over. “Almost everyone got funded last year with a reasonable story and some growth,” Nyatta said. “So I think [now] there will definitely be a wheat from the chaff effect.”