Pebble is laying off 40 employees, or close to 25 percent of its workforce, this week, the company's CEO Eric Migicovsky confirmed to Tech Insider.
Migicovsky added the company has raised $26 million over the last eight months in a mix of venture capital and debt, on top of its initial $20 million Kickstarter funding in February 2015.
"We've definitely been careful this year as we plan our products," Migicovsky said. "We got this money, but money is pretty tight these days."
The shakiness at Pebble comes at an interesting time in the wearables industry. On Monday, Apple slashed its entry level Apple Watch by $50 as customers await the second-generation. Further, wearables company Jawbone has seen its stock falling as industry pundits sound alarm.
However IDC, a popular research firm, sees the global shipments of wearable devices reaching 110 million by the end of 2016 with 38.2 percent growth over the previous year, giving companies like Pebble -- who was a part of the early smartwatch boom -- hope.
"We want to be careful," Migicovsky told Tech Insider on Wednesday. "Pebble is in this for the long haul. We have a vision where wearables will take us in five to 10 years, and this is setting us up for success."
Are the smaller, cash-strapped companies a good buyout option for the big wearable makers like Samsung, Apple, and fashion companies? Last year, Misfit was acquired by Fossil Group for $260 million. Some might argue this happened at the right time. Misfit got in and got out.