Automation Firm Hyperscience Slashes Staff, Loses CEO as Startups Face Growing Pressure

In December, automation-software startup Hyperscience said it raised $100 million in venture capital from Tiger Global Management, Bessemer Venture Partners and other firms at a post-investment valuation of $1.65 billion.

Then last week, less than three months later, a harsh reality set in: The eight-year-old company laid off 100 workers, or 25% of its staff, after failing to meet its financial targets for the fiscal year ending February 28, according to three people with direct knowledge of the matter. And earlier this morning, co-founder and CEO Peter Brodsky stepped down after talking to the firm’s board of directors, Chief Operating Officer Charlie Newark-French told The Information.

The moves reflect mistakes made by the company, whose software automates back-office tasks such as processing invoices and data entry. Those missteps included engaging in a hiring blitz in sales and marketing even as its software wasn’t resonating with customers as well as it had hoped. In the recent era of easy money for startups, venture capitalists increasingly were issuing private warnings to founders that they should avoid hiring employees to boost sales growth before proving that their products are good enough, which appeared to be Hyperscience’s error. The tumult at the New York-based company also suggests the recent sell-off in public technology stocks, including those of automation software firms such as UiPath, is bleeding into the private tech sector.