(Bloomberg) -- Samsara Networks Inc., a startup focused on internet-of-things technology, has raised $400 million, cutting its valuation to $5.4 billion, according to a memo from Chief Executive Officer Sanjit Biswas to employees Wednesday.
Biswas also held a company town hall in which he discussed the fundraising as well as 300 job cuts, representing 18% off the company and affecting employees outside North America in support functions such as recruiting and events.
“The deep economic impacts of Covid-19 have now become clear,” company spokeswoman Lindsay McKinley said in an email, confirming the equity financing as an additional capital reserve. “We have a strong business with continued revenue growth, but must address the realities of the economic situation,” she said, describing the job cuts as a “painful decision.”
The new capital is an extension of the company's last fundraising, in September 2019, and the new valuation represents a 14% decrease from its previous $6.3 billion valuation. Samsara has now raised a total of $930 million.
AllianceBernstein Holding LP, Franklin Templeton, General Atlantic, Sands Capital Management and Warburg Pincus LLC are new investors that participated in the round, McKinley said. Previous backers that invested again include Andreessen Horowitz, General Catalyst, Dragoneer Investment Group LLC and Tiger Global Management.
The cuts were made to reduce the company's operating expenses and “ensure Samsara's financial integrity,” Biswas said in the memo, adding that the startup had already cut senior executive salaries by 30% for the rest of the fiscal year and instituted a six-month hiring freeze.
‘Swift and Severe'
“Covid's economic impact has been swift and severe,” he wrote. “Indicators like labor rates, consumer spending and state budget deficits already look worse than the 2008 financial crisis.”
Although Samsara's fleet customers are continuing to operate, truck and trailer manufacturers are reporting record lows for new sales, Biswas wrote. Samsara's original plans for 2020 involved more than doubling recurring revenue, but “it's hard to see how we can maintain that same recurring revenue growth forecast with everything ahead of us.”
The fundraising, slated for the second half of the year, was accelerated to ensure the company could operate sustainably, and was completed last week, he said.
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