NFT-Based Startup Sorare Cuts 13% of Its Workforce Amidst Web3 Gaming Struggles

Key Takeaways

  • Sorare reduces its New York workforce by 22, intending to centralize operations in Paris.
  • Sorare faces the broader challenge of a prolonged "web3 winter," seeing significant investment declines.
  • Sorare remains hopeful despite industry-wide struggles and a shift in its operational strategy.

Sorare, a web3 fantasy sports company, has recently downsized its New York workforce by 22 employees.

TechCrunch has learned from the insiders that this decision aligns with the company’s broader objective to centralize operations within its Paris headquarters.

Nicolas Julia, Sorare’s CEO and co-founder, explained that the reorganization is part of Sorare’s preparation for future growth.

The restructuring particularly impacts the product development sector, with the aim of fostering better collaboration by consolidating this team in Paris. This move, he believes, will bolster the development of high-quality products in their sports offerings, including football, baseball, and basketball.

Sources indicate that an additional 11 New York staff members were offered the option to move to Paris. The company planning to fill most of the vacated New York positions in Paris. Julia anticipates hiring over 20 individuals to support these efforts in the coming six months.

The New York office is not closing. Essential operations will remain, especially those focused on U.S. customer relations and brand partnerships with American sports leagues like the MLB and NBA.

Insiders clarify that the layoffs were not primarily financially motivated. They acknowledge that Sorare, like many web3 ventures, has realized that achieving growth targets may take longer than initially expected.

Sorare daily volume
Sorare 24h trading volume | Source: DappRadar

Sorare’s platform allows users to trade NFT cards, generating revenue primarily through new card sales. Despite achieving $200 million in transactions in 2023, the company’s profitability and financial runway remain undisclosed. According to DappRadar, its daily volume is around $146,000.

Since its last fundraising event in 2021, which brought in $680 million at a $4 billion valuation, Sorare has not pursued additional capital. Current market trends show a waning interest in web3 entities. Investment in these startups plummeted 74% in 2023 to $7 billion from the previous year’s $26 billion. This resonates with a 38% decrease in overall venture funding.

The gaming sector within web3 has notably struggled to gain substantial market interest. Industry experts have observed that the anticipated demand for web3 gaming has not materialized as expected. This led to significant setbacks for companies like Mythical Games and Dapper Labs, both of which have undergone multiple layoffs.

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