Conventional wisdom holds that startups function as a safety net in times of layoffs. As large companies shed workers, fast-growing newcomers are expected to absorb displaced talent, whether immediately or over time.
That narrative resurfaced as Big Tech layoffs extended into early 2026, with more than 26,000 employees affected across 59 companies in January.
Data from an Ascend survey of startups suggests the picture is more complicated.
Among the VC-backed startups in our survey, nearly nine in 10 CEOs report actively using AI in the operation or building of their companies. Many say they are planning to hire smaller teams than they would’ve needed just a few years ago.
To understand how those choices are being made, Ascend surveyed ~70 CEOs of VC-funded startups that are small and overwhelmingly early stage. The average company was founded in 2022, most are pre-seed or seed, and they are typically building their first 10 to 15 roles.
These companies have always represented a small share of the labor market, but they are often where new roles are created first. Amazon was once a startup, too, which is why shifts at this stage matter.
Opportunities certainly still exist, even in this
economy! Later-stage startups continue to hire, new companies are being formed, and early-stage founders are looking for strong talent. Many people affected by layoffs will find a great landing, and some will start companies of their own, as has happened after nearly every downturn.
But at the same time, hiring dynamics are changing in quieter ways. At large companies, AI-driven efficiency gains tend to surface through layoffs that make headlines. At early-stage startups, they appear to surface earlier, through hiring plans that never materialize and roles that may never be filled.
Founders remain builders and job creators, while also operating under intense pressure to extend runway and move quickly with lean teams. In many cases, they are navigating the same forces as their larger peers, just earlier in the company’s life.
*Layoffs and tight job markets still suck!* I’ve seen the impact firsthand, especially on people with families, visas, and very little margin. None of this should undermine the skills and humanity of those impacted.
What this survey is intended to capture is a shift in how startups are being built from the beginning. AI is shaping team design long before those changes show up in headline job numbers, influencing when new roles appear and how many emerge.
Startups may still create the next wave of jobs, as they always have. The path looks different this time, though, and it’s worth being clear-eyed about that, especially for the people living through the transition.
If you’re a founder who is hiring, feel free to link your job board in the comments.
👉 Swipe through the carousel for the data and breakdown.