Sailfish OS backer Jolla to lay off half of its staff as it hunts for new funding

Finnish handset maker Jolla, the company behind the alternative smartphone platform Sailfish OS, is going to lay off half of its workforce and try to restructure its debt after it failed to close a $10.6 million (€10 million) Series C round quickly enough. The company hopes the measures will only be temporary, but is going to start laying off workers in December.

Jolla smartphone

Jolla Chairman and co-founder Antii Saarnio told TechCrunch that negotiations with the unnamed single investor for its Series C have been postponed but that he hopes the financing talks will start up again in December. The company faces a crunch because it needs the funding to keep pace with its expenses.

"We were negotiating for three months for financing round, and of course we are a startup which is dependent on the external financing. In the final moments this financing round was postponed, still with one month -- and this caused us to be forced to make this action," he said.

Saarnio said around half Jolla's staff will be laid off as it cuts expenses, but the startup clearly hopes to rehire its staff once or if it secures new funding, TechCrunch noted. "We are of course hoping that these are temporary actions… And we are committed to continue the company but really this depends on the external investors as well, how are we able to continue operations," Saarnio said.

Jolla was founded in 2011 and shipped its first smartphone in Europe in December 2013. The company has now launched two mobile devices internationally and raised a total of $50 million.

Jolla pitches Sailfish OS as an alternative to the Google (NASDAQ: GOOG) Android platform and as a way for device makers to offer an independent platform to build differentiated consumer offerings. The company says that for security companies, the platform offers an ability to build secure solutions. Jolla hopes to offer Sailfish OS to different partners who want a tailored operating system to support their own businesses, the firm said. Saarnio said Jolla has "several major and smaller potential clients who are interested in using Sailfish OS in their projects." 
Jolla has today filed for the debt restructuring program in Helsinki and the company aims to get more time to arrange the future financing of the business.  

Saarnio told TechCrunch that without the funding it is seeking the firm would be unable to retain the talent and fund the expensive development work needed to ensure its Sailfish OS is competitive against larger rivals and would need to move away from the model of licensing the platform.  

"In order to keep fighting we need to close the December financing for sure. It's very important for the company," he said. "The Sailfish OS requires quite a big investment and human resources… And that's something we have difficulties to continue if we don't have additional financing, it's difficult to continue developing the operating system with these resources that we have at the moment."

For more:
- see this release
- see this TechCrunch article

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