Pictolabra lays off entire staff. Management blames MGVC. MGVC denies its involvement in studio’s closure – Game World Observer

All 30 employees have been laid off at mobile developer Pictolabra. The studio’s management seems to lay the responsibility on MGVC, an investment division of MY.GAMES, which has pulled the funding Pictolabra relied on. The fund, however, controlled less than 1% of the company and claims it had no say in the matter, while the studio knew about the termination of funding well in advance.

Image source: Pictolabra’s official website

On December 20, our sister site App2Top.ru received an anonymous letter, which was signed by Pictolabra employees based in Kaliningrad, Russia. A source at the studio later confirmed its authenticity.

Here are the key takeaways from the letter:

  • According to the employees, the studio has always subsisted on the funding from MGVC;
  • On December 14, Pictolabra management told employees that “MGVC has decided to stop funding the studio and, consequently, close it;”
  • The leadership also claimed that they only had enough money in their accounts to pay for vacations and two weeks’ work;
  • The entire staff is now being laid off, which violates the law (according to article 180 of the Labor Code of the Russian Federation, an employer is obliged to notify employees in person at least two months before dismissal due to staff redundancy or the company’s liquidation);
  • The employees were not paid two monthly salaries before being laid off, which is required by law if the layoffs occur immediately;
  • The team of 30 people was offered to sign severance agreements, but some employees refused and tried to make the situation public.

“We understand that any studio funded by an investor, especially a smaller one, can be closed, but we don’t understand how they can decide to lay off 30 people and absolutely ignore the workers’ legal rights,” the letter reads.

In the statement, Pictolabra employees also implored why the studio wasn’t given time to look for another investor in advance. They have been laid off ahead of the winter holidays, still having to pay loans and mortgages.

MGVC later commented on the matter, confirming that it has stopped funding Pictolabra. Here is what the fund told App2Top.ru:

  • It has less than 1% stake in the studio;
  • It paid the total volume of investments on its part;
  • Pictolabra management knew about the termination of funding in advance;
  • The HR department of MY.GAMES is now voluntarily helping Pictolabra employees find new jobs.
  • MGVC decided to stop working with Pictolabra because the studio failed to fulfill the initial agreements.

The full comment from MGVC can be read below:

“MGVC has been an investor in Pictolabra since late 2018 with less than 1% stake in the studio. Under the terms of our collaboration, we provided a loan to help the studio grow and develop the products that Pictolabra presented to us during the discussion of the investment round. The studio has been provided with the entire volume of the agreed investment, and we have completely fulfilled all our obligations. Unfortunately, following this investment round, the studio failed to achieve the goals and results that were discussed at the start of our collaboration. As a result, the decision was made not to proceed to the next investment round.

We assess the progress towards the agreed goals with our partners several times a year, so that each side has a comprehensive understanding of the situation and has the opportunity to take the necessary steps to adjust its strategy. In the course of another internal discussion, according to the information we have, the Pictolabra management decided to cut down the studio’s operating activities. All MGVC partner studios continue to be independent teams and independently make management decisions. At the same time, we understand that it is a difficult moment for the entire team. It is important for us to support our partners, so we will do our best to help Pictolabra employees and find new job opportunities for them.”

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