Clearco, a Toronto-based fintech capital provider for online businesses, told TechCrunch it has laid off 125 people, or 25% of its entire staff. Those affected will receive a severance package, a two-year window to exercise equity and employment transition support from the management team, according to Clearco. The company didn’t say which teams and roles were affected, or whether any C-suite members were let go.
Since its launch, the startup, formerly known as Clearbanc, has been designed to help e-commerce businesses secure non-dilutive capital, sales and transactions. Now, as consumers retreat, the surge in e-commerce is getting creaky; challenge startups such as Clearco that depend on a steady stream of cohort activity.
Michele Romanow, CEO and co-founder of Clearco, and Andrew D’Souza, co-founder and executive chairman, sent a memo to staff Friday morning citing the macroeconomic environment as the reason for the latest downsizing.
“We have rising interest rates unprecedented since the mid-1990s, the highest inflation in four decades, one of the biggest fluctuations in the European currency since the creation of the euro, all compounded by a well-documented slowing in e-commerce growth and ongoing supply chain issues for businesses of all sizes,” the duo wrote in a memo. Along with the layoffs, Clearco said it “considering strategic options” for its international options After starting in Toronto, Clearco has launched in the UK, the Netherlands and other EU markets through 2021. But expansion n hasn’t been smooth sailing.
Clearco expanded into Germany in June but simultaneously cut staff in Ireland by 10%, just three months after entering the market and announcing plans to hire more than 100 staff, reports Independent.ie. It’s unclear if there are more geographically targeted layoffs to come, or what exactly the “strategic” options are – but we do know that Clearco has plenty of international competitors.
A Clearco spokesperson wrote via email that the company would not be taking any interviews today and did not clarify the future of the startup’s international positions. The startup previously made another round of layoffs in March 2020, a reduction that affected 8% of staff and then reasoned “the long-term economic impact of COVID-19.”
D’Souza stepped down from his role as the company’s chief executive in February, but continues to be the company’s largest shareholder.
D’Souza’s departure from the chief executive role came as the company began to hint at the need to focus on financial results. “For a company of our level of maturity, frankly, we built this company at a time when capital was cheap and growth was at all costs,” D’Souza said in February. “And now we’re entering a period where you’re balancing capital efficiency and growth – we have to start publishing forecasts and hitting those forecasts.”
He added, “These things come much more naturally to Michele and less naturally to me, and it was just going to be a CEO’s job as the company got more and more mature.” Romanow has served as general manager for nearly five months.
It’s been about a year since Clearco announced it had secured funding from SoftBank, a $215 million tranche that closed just weeks after the company landed a $100 million seed round that quintupled its valuation to $2 billion. of dollars.
The full memo from Romanow and D’Souza is below:
This is the note that no founder wants to write. Today, we have made the difficult decision to reduce our workforce by 125 people and are considering strategic options for our international operations. No words can soften the shock of being part of a major layoff and I won’t pretend that hearing “I’m sorry” from us will make it any easier. We are deeply saddened to lose so many talented, hardworking and enterprising people across all areas of our organization and will work tirelessly to open our networks directly to ensure you find a great next home.
Invitations will be sent shortly to those who are part of this downsizing, followed by meetings with team leaders.
How did it happen?
The short answer is that the current macroeconomic environment looks very different today than it did in 2021. We have rising interest rates not seen since the mid-1990s, the highest inflation in four decades, the one of the strongest fluctuations of the European currency since the creation of the euro. , all compounded by a well-documented slowing in e-commerce growth and ongoing supply chain issues for businesses of all sizes.
We were building to keep up with the growth of the economy and now face significant headwinds that simply did not exist six months ago. We have increased our workforce too quickly in anticipation of continued economic growth and that decision is up to us.
After evaluating the current market conditions and the uncertainty we are seeing in the e-commerce industry, this was the most prudent step to take and was necessary to:
- Ensure that we are able to support as many founders as possible, now and in the future, on their growth journey and;
- Coming out of this economic downturn with a sustainable and profitable business
To those leaving our ClearCrew
We know that each of you will deal with this difficult news in your own way. Whether you’ve been here for months or years, know that without you and your efforts, we could never have made Clearco the category leader it is today. We are so grateful to have had you on this trip.
Our Human Resources team will work with each departing employee to ensure they are supported through this transition, including:
- pay severance pay;
- two-year window to exercise equity;
- extensive medical coverage; and
- employment transition support directly from our leadership team.
We’ll do everything we can to help you move on to your next chapter.
What will happen next?
Our philosophy has always been to support entrepreneurs as they grow and evolve, especially those who have been unable to obtain funding historically. Even in times of recession, we are committed to helping fund as many founders as possible. We know we need to do everything we can to support the 10,000+ founders who have taken over $5 billion from us, the people who need the capital the most.
Resilience is in the DNA of every entrepreneur. They inspire who we are as individuals and as a company. We’ve pivoted this business countless times, from financing Uber drivers to Airbnb hosts, and all after we were told revenue-based financing would never take off. We created a category, and now there is a company like us in almost every country in the world.
As painful as today is, it should remind us to move forward with more focus, determination and determination than ever before.
– Michele and André