Clearco, a Toronto-based provider of fintech capital to online companies, has laid off 125 people, or 25 percent of its total workforce, told TechCrunch. Those affected will receive severance pay, a two-year window of equity and job transfers from the management team, Clearco said. The company did not say which teams and roles were affected or if any C-suite members were let go.
Since its inception, the startup, formerly known as Clearbanc, has been built around helping unincorporated e-commerce businesses find capital, sales and deals. Now, as consumers pull back, the rise of e-commerce is turning into a frenzy. Challenging startups like Clearco rely on a steady stream of activity from the team.
Michelle Romano, Clearco CEO and Co-Founder and Andrew D’Souza, Co-Founder and CEO, sent a memo to employees Friday morning citing the macroeconomic environment as the reason for the recent layoffs.
“We’re experiencing interest rates not seen since the mid-90s, the highest inflation in four decades, one of the biggest swings in European currencies since the euro, all coupled with a well-documented slowdown in e-commerce growth. And it continues to be a supply chain issue for companies of all sizes,” the two wrote in a note. Alongside the layoffs, Clerco said it is “considering strategic options” for international options. After launching in Toronto, Clearco has launched in the UK, the Netherlands and other EU markets through 2021. But the expansion was not easy.
Despite expanding into Germany in June, Clerco cut 10% of its staff in Ireland, breaking into the market three months later and announcing plans to hire more than 100 staff, according to Independent.ie. It’s not clear if there are more geographically focused layoffs or what “strategic” options lie ahead – but we do know that Clearco has many international competitors.
A Clearco spokeswoman wrote in an email that the company would not be conducting any interviews today and did not clarify the future of the startup’s international positions. The startup previously made another layoff in March 2020, which affected 8% of its workforce due to the “long-term economic impact of COVID-19.”
Although D’Souza stepped down as CEO of the company in February, he remains the largest shareholder in the business.
D’Souza’s departure as CEO comes as the business signals a need to focus on financial results. “For a company of our maturity level, we honestly built this company where capital was cheap and growth at all costs,” D’Souza said in February. And now we’re moving into a period where we have to balance capital efficiency and growth—we have to make projections and hit those projections.
He added, “Those things come naturally to Michelle and naturally to me, and as the company grows over time, this will become the CEO’s job.” Romano has been CEO for five months.
It’s been a year since Clerco announced funding from SoftBank, a $215 million venture that closed weeks after the company landed a $100 million round that raised its valuation to $2 billion.
Romanow and D’Souza’s full memo is below.
Hello everyone
This is a note no founder wants to write. Today we have made the hard decision to reduce our workforce by 125 people and are considering strategic options for our international operations. No amount of words can soften the feeling of being a part of a significant resignation, and I don’t pretend that hearing “sorry” from us makes it any easier. We are deeply saddened to lose so many talented, hard-working and enterprising people in all parts of our company and we will work tirelessly to open up our networks directly to ensure you find a great next home.
Invitations to meetings with team leaders will be issued soon as part of this downsizing.
How did this happen?
The short answer is that the current macroeconomic environment looks very different from 2021. Interest rates have risen not seen since the mid-90s, with the highest inflation in four decades, one of the biggest swings in European currencies since the euro was launched. , all combined with the slowdown in e-commerce growth that has been largely recorded and ongoing supply chain issues for companies of all sizes.
We’ve been building and adjusting to the economic growth and now we’re facing significant headwinds that didn’t exist six months ago. In anticipation of continued economic growth, we quickly grew our heads and the decision is only up to us.
After assessing the current market conditions and uncertainty we are seeing in the e-commerce sector, this was a very prudent move and it was necessary to:
- Make sure you’re able to support as many founders as possible today and in the future on their growth journey.
- A sustainable and profitable company to get out of this recession
For those who leave our ClearCrew
We know that each of you is dealing with this difficult news in your own way. Whether you’ve been here for months or years, please know that without you and your efforts, there is no way we could have built Clerco into the category leader it is today. We are so grateful that you are a part of this journey.
Our people team works with every traveling employee to ensure they are supported through this transition, including:
- Providing severance pay;
- A two-year window to implement equity;
- extended health coverage; And
- Career transition support directly from our leadership team.
We’ll do everything we can to help you get to your next chapter.
What happens next?
Our ethos has always been to support entrepreneurs as they grow and develop, especially when the public has historically been unable to access funding. We are committed to supporting as many founders as possible, even in a recession. We know we need to do everything we can to support the 10,000+ founders who have taken $5B+ from us, who need the capital the most.
Resilience is built into the DNA of every entrepreneur. They inspire who we are as individuals and as a company. We’ve run this business countless times for everything from financing Uber drivers to Airbnb hosts, and that’s after being told revenue-based financing will never take off. We created a category, and now there’s a company like us in every country in the world.
As painful as it is today, it should remind us to move forward with more focus, determination and purpose than ever before.
– Michelle and Andrew
