Layoffs strike SoundHound as they secure $25 million in new funding
In a recent turn of events, SoundHound, a voice AI company known for its popular mobile apps SoundHound Music and Hound, has announced a series of significant changes. The tech company, which went public via a SPAC in early 2022, has been faced with challenges in the changing economic conditions, leading to layoffs and refinancing.
On January 26, 2023, SoundHound updated the details of its severance package payout. The funding, amounting to $25 million, comes from a diverse set of financial and strategic investors. This investment will allow SoundHound to pay severance to the laid-off employees as per the terms of their severance agreements.
The layoffs, which affected nearly half of the company's workforce, were confirmed in a press release. SoundHound's CEO, Keyvan Mohajer, attributed the layoffs to the challenging economic conditions, including high interest rates, rising inflation, and fears of recession. The company laid off around 200 staff members, and previously, in November 2022, it had imposed salary reductions of up to 20%.
Former SoundHound employees have expressed shock at the handling of the layoffs, expecting a more generous severance package from a 17-year-old public company. Despite the funding, some former employees have expressed disappointment and confusion over the "pitiful" severance packages they were offered.
SoundHound's refinancing is part of a move into a "minimally dilutive facility." This means the company is refinancing its current debt without issuing new shares, which helps to maintain the current shareholders' ownership. The new funding and staff reductions are expected to result in cost savings "in excess of $60 million" for the fiscal year.
It's important to note that the tech industry has seen a significant increase in layoffs, making them "unfortunately a dime a dozen these days." The changing economic conditions have made tech companies like SoundHound less desirable to investors. This has led many tech companies to cut costs, including layoffs and salary reductions.
Despite the challenges, SoundHound continues to serve a diverse customer base, including high-profile brands such as Mercedes-Benz, Snap, Netflix, and others. The company's apps, SoundHound Music and Hound, are used for music discovery and voice search assistance, respectively.
SEC filings submitted by the company show it expects to take on $4.4 million to $5.2 million in charges related to severance payments, employee benefits, and share-based compensation. The exact reasons for SoundHound's massive layoffs in January 2023 are not fully disclosed, and further information may require more targeted sources or direct company disclosures.
[1] [2] [3] (Sources providing information on SoundHound's technological developments and recent partnerships in 2025, but not the layoffs or employee reactions from early 2023)
[5] (General information about layoffs in the tech sector from 2023-2025, influenced by factors such as AI automation and cost-cutting measures amid rapid changes in technology adoption and economic conditions)
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