Update: Wikia has confirmed that about 10 percent of its workers have been laid off, but points out that it is still trying to hire for open positions.

At the beginning of this year, Wikipedia co-founder Jimmy Wales officially launched his attempt at a human-powered search engine, dubbed Wikia Search. TechCrunch was not impressed initially, to say the least. Although it has come a long way since launch, it looks like the young venture behind the experimental search engine is feeling the nasty sting of the troubled economy.

Rumor has it that parent company Wikia is letting go 30% of its current 43-person workforce, a percentage that appears to be the rule of thumb for lay-offs these days. TechCrunch has been hearing rumors along these lines as well.  The company, which also offers wiki software, has raised a total of $14 million to date from rockstar angel investors like Marc Andreessen, Joi Ito, and Ron Conway, as well as Bessemer Venture Partners, the Omidyar Network and Amazon.

At this point, we have calls and e-mails out to the company asking them to confirm the cuts.  We’ll update this post if they decide to respond. (See above).

The company is rumored to be bleeding cash, despite its effort to clean up its act in delivering decent search results and its recent addition of an API, opening its engine to anyone who wants their own data or application to show up in results. Other products of Wikia include a wiki creation tool with the same name, and Scratchpad Wiki Labs, which allows people to test and build mini-wikis before moving them over to Wikia’s full wiki sites.

Traffic numbers for the search engine seem to be heading in the right direction, but by now it should be clear that having a business model that depends solely on Google Ads will prove insufficient for many startups to weather the ongoing financial storm and pending recession.

The job cuts have been added in the TechCrunch Lay-off Tracker.

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