---
title: "How Layoffs in Startupland Differ Between B2B \u0026 B2C Companies"
description: "Explore how B2B startup layoffs outpace B2C for the first time since 2020, with data-driven analysis of headcount reductions across tech sectors in 2023."
categories: ["strategy","finance","startups"]
keywords: ["B2B layoffs","B2C layoffs","startup layoffs","venture capital","headcount reduction","Tomasz Tunguz","2023 layoffs analysis","tech sector layoffs","innovation boom/bust cycle","Theory Ventures"]
ai_summary: "B2B startups experience higher layoffs than B2C for the first time since 2020, highlighting market volatility and business model risks."
date: 2023-01-23
lastmod: 2026-07-23
canonical_url: https://www.tomtunguz.com/whats-different-in-this-layoff-cycle/
author: "Tomasz Tunguz"
---

The current wave of layoffs, a difficult component of the innovation boom/bust cycle, differs from the previous years' dynamics. 

B2B companies have reduced headcount to a greater extent than at any time since 2020.

!["chart of layoffs from 2020-2023 by buyer type"](https://res.cloudinary.com/dzawgnnlr/image/upload/bnmejuxsxeklzqiyjnyl.png)

In the last three years, B2C startups' ratio of layoffs have dwarfed B2B layoffs. In 2020, B2C companies cut 8.8x the number of B2B employees. 3.8x in 2021, & 6.9x in 2022. 

Year-to-date in 2023, the figure is 1.6x, just 60% more.

!["box plot of the distribution of layoff sizes by buyer from 2020-2023"](https://res.cloudinary.com/dzawgnnlr/image/upload/tcicsq06w0k9pqmvxhpq.png)

Reduction magnitudes don't differ by buyer type. B2B & B2C companies both downsize around 15% on average, with a 75th percentile of 30%.

Tangentially, Covid impacted both segments. The average layoff cut 50% or more of staff & more than a quarter of these businesses folded. But this is a statistical aberration from a tiny number of companies.

!["count of companies cutting staff by year from 2020-2023 by buyer"](https://res.cloudinary.com/dzawgnnlr/image/upload/tktsjkhex0y32w4kg32a.png)

Instead, the gross number of companies explains the delta between B2B/B2C layoffs. But this isn't an endemic phenomenon.

| Data Point | B2B | B2C | 
| --- | ---: | ---:| 
| Companies Raised Capital | 21,256 | 17,109 | 
| Total Raised, $b | 275 | 229 | 
| Raised per Company, $m | 77 | 75 | 

About 4k fewer B2C companies than B2B companies raised roughly equivalent capital since 2020, which means B2C companies may suffer from higher volatility in general: more exploratory business models, more risk to their core businesses when market conditions change.

Longer-term contracts & steadier enterprise buyers help smooth shocks for B2B companies. 

The main challenges facing B2B startups today are decreases in seat counts as their customers downsize & [slower sales cycles which creates volatility in bookings](https://tomtunguz.com/pipeline-sales-cycle/), which has caused more layoffs than an anytime in the last four years.