Web3-enabled fantasy sports platform Sorare laid off 22 employees based in its New York office in February. The move comes as the startup wants certain teams to be concentrated at the company’s Paris headquarters to improve communication and efficiency, a source familiar with the matter told TechCrunch.
“As we plan for our next stage of growth, Sorare has made the decision to centralize some of our functions at our Paris HQ,” Nicolas Julia, the co-founder and CEO of Sorare, told TechCrunch through email. “This primarily affects our product development team as we believe that bringing that team together in the same space in Paris will allow them to collaborate more effectively as they continue to build best in class products across our football, baseball and basketball offerings.”
An additional 11 employees in the New York office were asked to relocate to Paris, a source familiar with the matter said. The company will backfill most of these laid-off roles in Paris, according to Julia, with plans to hire more than 20 roles in the next six months.
Sorare is not shutting down its New York office. It will keep certain teams there like those that work with U.S. customers or on its U.S. brand partnerships with leagues like the MLB and NBA, according to Julia. Sorare’s partnerships with these sports leagues are locked in for several years, a source added.
While a source familiar with the matter said that these layoffs were not financially driven, the source did add that like many other web3 companies, the time horizon for how long it will take Sorare to reach its growth goals is longer than it originally thought. Sorare’s users can buy and sell NFT cards from other players on its platforms, although Sorare primarily makes its money by issuing and selling new cards. Sorare saw $200 million in user transaction volume in 2023, a source familiar with the situation said. The company declined to say if it was profitable or what runway it had left.
Sorare hasn’t raised capital since its $680 million Series B round in 2021, which valued the company at $4 billion. According to secondary data platforms, Sorare hasn’t been garnering much interest from investors there. To be fair, the declining interest isn’t strictly an issue for Sorare — web3 companies have largely fallen out of favor with investors. Startups in the category raised $7 billion in 2023, according to Crunchbase data, a drop of 74% from 2022’s $26 billion. For context, overall venture funding dropped 38% in the same timeframe.
Web3 companies focused on gaming have struggled to find meaningful traction. Last month, video game–focused VCs told TechCrunch that the market for web3 games turned out to be significantly smaller than some investors had hoped. This has become evident.
Mythical Games, a web3 gaming startup, raised nearly $300 million in venture money before holding three rounds of layoffs. Dapper Labs, another startup in the category, has also held numerous rounds of layoffs.
This is not to say Sorare will see the same fate. The company has an active community of nearly 13,000 people on Reddit posting regularly about the fantasy games and a community of third-party media dedicated to these competitions. Hopefully, even if the web3 winter continues, Sorare’s reorg will be enough.