I've had to let people go, and have been a survivor through multiple rounds of layoffs, if you are VC Backed, first check if it's possible to land the better performers at another company that backed by the same investors.

The first start up I worked at, had a pretty tough rounds of layoffs. One of the engineers found a home at a startup that was backed by the same VC. Eventually as the first startup went under, he laid the ground work for some of us to transition over to his dev team.