Aleph Alpha's downfall: Layoffs, leadership exits, and a €500M funding hangover

Aleph Alpha, the German AI firm once seen as a rising star, has faced a turbulent period since its €500 million funding round in 2023. The company has scaled back operations, cut jobs, and seen key leadership changes, including the departure of its founder from the CEO role.

The company's struggles began after its high-profile €500 million Series B round, which critics later called poorly communicated. Despite the funding, Aleph Alpha failed to secure follow-up investments, unlike competitors such as Hugging Face and Mistral AI, which expanded aggressively in the European market.

By 2024, the firm had started reducing its workforce. Recent reports confirm around 50 employees—17 percent of staff—are being laid off. The cuts follow a broader strategy overhaul that made some roles redundant. Leadership changes added to the instability. In summer 2025, Reto Spörri joined as co-CEO alongside founder Jonas Andrulis. But by October, Andrulis stepped down completely, transitioning to an advisory board seat in January 2026. Ihan Scheer later replaced him as co-CEO. The company has also faced criticism over its financial performance and the heavy influence of the Schwarz Group, its largest backer. High-profile executive departures further weakened confidence in its direction.

Aleph Alpha now operates with a leaner team and a reshuffled leadership structure. The layoffs and strategic shifts reflect ongoing efforts to stabilise the business. Whether these changes will help the company regain its footing in the competitive AI sector remains to be seen.