Startups use shares, perks to dodge layoffs

TL;DR

Startup Winter Threat: A funding slowdown endangers Australia's fast-growing startup sector, prompting creative retention tactics.
Equity Over Salary: Startups offer employee share option schemes in place of high salaries and hire low-cost university graduates.[[1]](https://www.theaustralian.com.au/business/technology/startups-turn-to-share-schemes-perks-to-stave-off-layoffs/news-story/936f3575087024bcc542f0a2e6027580)
Survival Strategies: Executives use unique perks and share schemes to avoid layoffs amid tough conditions.[[1]](https://www.theaustralian.com.au/business/technology/startups-turn-to-share-schemes-perks-to-stave-off-layoffs/news-story/936f3575087024bcc542f0a2e6027580)

The story at a glance

Australian startups face a "start-up winter" that threatens cutbacks in the country's fastest growing sector. Executives at these firms are turning to employee share option schemes instead of big salaries, cheaper hires from universities, and other perks to retain staff without layoffs. This is being reported as global venture funding dries up in mid-2022, hitting local tech firms after years of boom.[[1]](https://www.theaustralian.com.au/business/technology/startups-turn-to-share-schemes-perks-to-stave-off-layoffs/news-story/936f3575087024bcc542f0a2e6027580)

Key points

Article by Vesna Poljak, business editor at The Australian.
Describes a "start-up winter" risking Australia's startup sector, previously the fastest growing.
Startups substitute employee share option schemes for hefty salaries to conserve cash.
Increasing recruitment of inexpensive university graduates to cut payroll costs.
Executives deploy "unique strategies" like perks to ensure company survival and stave off layoffs.[[1]](https://www.theaustralian.com.au/business/technology/startups-turn-to-share-schemes-perks-to-stave-off-layoffs/news-story/936f3575087024bcc542f0a2e6027580)

Details and context

The piece highlights cash pressures on Australian startups amid a global venture capital pullback in 2022, termed "start-up winter" in the subheadline. Firms respond by leaning on equity incentives, which align staff with long-term success without immediate cash outlay, and by tapping fresh, lower-paid talent from universities.

This fits broader trends where startups prioritize capital efficiency over rapid headcount growth, as seen in reduced funding rounds post-2021 boom.[[2]](https://www.pitcher.com.au/investment-and-wealth/beyond-the-boom-the-next-chapter-for-venture-capital-investors-in-australia)

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Why it matters

Australian startups, once a boom sector, now scramble for survival tactics amid funding droughts that could slow innovation and job creation. For founders and employees, it means equity-heavy pay packages over cash, potentially aiding retention but risking dilution or unproven value. Watch if "unique strategies" sustain firms through 2022 or if layoffs hit despite efforts, as global tech adjusts.

FAQ

Q: What is a "start-up winter" in this context?

A: It refers to a tough period of reduced funding and investment threatening Australia's startup sector, which was previously the fastest growing. Executives are using creative measures like share schemes to survive.

Q: How are Australian startups using share schemes?

A: They offer employee share option schemes instead of hefty salaries to attract and retain staff while preserving cash during the funding slowdown.

Q: Why hire inexpensive university graduates?

A: Startups are increasingly recruiting them to lower payroll costs and avoid layoffs amid the "start-up winter" pressures.