Paper, the online tutoring unicorn, just had a second round of layoffs. The cuts come a year-and-a-half after raising $270 million in Series D funding.

  • Paper, an edtech unicorn focused on online tutoring for K-12 students, has laid off staff.
  • The startup raised $270 million in Series D funding last year but had recently come under scrutiny.
  • The cuts come as edtech startups are facing increasing pressure amid a downturn.

Insider has learned that the Canadian online tutoring startup Paper has laid off 106 employees, or 4% of its workforce.

According to an employee affected by the layoffs and recent LinkedIn posts from former employees, the cuts impacted tutors and management teams across the board. This is Paper’s second round of layoffs this year, following the dismissal of 81 employees, or 3% of its workforce, in April. The employee clarified that these figures do not differentiate between tutors, who were frequently part-time, and full-time operational staff, and that more full-timers were likely affected.

Employees were informed of layoffs during a company-wide Zoom call yesterday afternoon, and those affected received an email shortly afterwards, according to the employee. Employees who were laid off were also removed from the company Slack and email by 4:00 p.m. that day.

According to market research firm HolonIQ, Paper will become a unicorn in February 2022 after raising over $270 million in Series D funding led by SoftBank Investment Advisers and Sapphire Ventures, valuing the startup at $1.8 billion. According to Paper’s website, unlike other online tutoring companies, the majority of the startup’s online tutors are classified as employees rather than contractors. However, these employees are frequently part-time and operate independently of full-time employees.

The startup has contracts to provide outside tutoring for students in over 400 school districts in Canada and the United States, including some of the country’s largest, such as Los Angeles Unified. However, the company has recently come under fire for tutor burnout: a recent Chalkbeat investigation revealed that many Paper tutors are frequently working with multiple students at once on unfamiliar subjects.

“The culture there is one of general distrust,” the recently laid-off employee explained to Insider.

The layoffs come at a difficult time for the edtech market. According to HolonIQ, global edtech venture capital funding was $1.8 billion in the second quarter, less than half of what it was in the second quarter of 2022, which was $4.5 billion.

Other prominent edtech startups, such as Byju’s, GoStudent, and Degreed, have also laid off employees in the last year.

Paper cofounders emailed the remaining staff on Tuesday to explain the layoffs.

“The growth landscape in 2023 has shifted significantly, affecting all organizations globally, including ours.” “At Paper, we’ve seen an outstanding increase in product engagement and significant academic outcomes delivered by our product across our partner communities,” Cutler wrote in an email to employees that was later posted on the company’s blog. “Like many other industries, education is experiencing market conditions shifts. School districts, like many businesses, are attempting to do more with less.”

A Paper spokesperson confirmed the layoffs to Insider but declined to comment further.

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