Smith & Tinker, the digital content and toy based company run by Jordan Weisman, has laid off 30 per cent of its workforce.
According to a VentureBeat report, this is likely to have meant job losses for around 15 members of staff.
"As many startups do, we staffed aggressively early on to meet deadlines for launching our product online and at retail this year," the company said in a statement.
"These layoffs are needed to bring our organisation to a healthy operational size for the remainder of this year and 2010.
"Nanovor has been recognized by FunFare and Dr Toy as a hot toy for 2009 and has seen strong consumer adoption to date; the company continues to receive solid support from our board. Employees leaving the company will receive severance packages."
Former FASA Studios founder Weisman founded Smith & Tinker in 2007. Earlier this year, the company raised funding of USD 29 million and released its first online game, Nanovor.
Following the setting up of the new company, Weisman also licensed the rights to his now Microsoft-owned creations MechWarrior, Shadowrun and Crimson Skies