Clearco, a Toronto-based fintech capital provider for online businesses, tells MovieUpdates it has laid off 125 people, or 25% of its entire workforce. Those affected will receive severance pay, according to Clearco, a period of two years to exercise equity and job transition support from the leadership team. The company has not said which teams and roles are involved or if any members of the C-suite have been fired.
Since its launch, the startup, formerly known as Clearbanc, has been built to help e-commerce companies obtain non-dilutive capital, sales and deals. As consumers pull back, the boom in e-commerce is beginning to crack; challenging startups like Clearco that depend on a constant flow of cohort activities.
Michele Romanow, CEO and co-founder of Clearco, and Andrew D’Souza, co-founder and executive chairman, sent a staff memo Friday morning citing the macroeconomic environment as the reason for the latest staff cuts.
“We have seen rising interest rates since the mid-1990s, the highest inflation in four decades, one of the biggest swings in the European currency since the inception of the euro, all exacerbated by a slowdown in e-commerce growth that is well underway. is documented. and ongoing supply chain issues for companies of all sizes,” the duo wrote in a memo. In addition to the layoffs, Clearco said it is “considering strategic options” for its international options. Starting in Toronto, Clearco was launched in the UK, Netherlands and other EU markets until 2021. But the expansion didn’t all go smoothly.
Clearco expanded into Germany in June, but at the same time cut 10% of its workforce in Ireland, just three months after breaking into the market and announcing plans to hire more than 100 employees, Independent.ie reports. It’s unclear if there will be more geographically focused layoffs, or what exactly “strategic” options are – but we do know that Clearco has many international competitors.
A Clearco spokesperson wrote via email that the company is not conducting interviews today and did not clarify the future of the startup’s international positions. The startup carried out another round of layoffs earlier in March 2020, a reduction that hit 8% of its workforce and then reasoned on the “long-term economic effects of COVID-19”.
D’Souza stepped down from his position as CEO of the company in February, but remains the company’s largest shareholder.
D’Souza’s departure from the CEO position came as the company began to allude to the need to focus on financial results. “For a company of our maturity level, we candidly 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 time where you have to balance capital efficiency and growth — we have to start making predictions and meeting those predictions.”
He added, “Those things come much more naturally to Michele and less natural to me, and that would just become a CEO’s job as the company matured.” Romanow has been in the chief executive role for nearly five months.
It’s been about a year since Clearco announced it had secured funding from SoftBank, closing a $215 million tranche just weeks after the company landed a $100 million round that quadrupled its valuation to $2 billion.
Romanow and D’Souza’s full memo is below:
This is the note 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 blow of a major layoff and I won’t pretend hearing “I’m sorry” from us will make it any easier. We are deeply saddened to lose so many talented, hardworking and enterprising people in every part of our organization and will work tirelessly to open our networks directly to ensure you find a great next home.
Invitations will soon be sent out to those who are part of this reduction in force, followed by meetings with team leaders.
How did this happen?
The short answer is that the current macroeconomic environment looks very different today than it will be in 2021. We haven’t seen a rise in interest rates since the mid-1990s, the highest inflation in four decades, one of the largest swings in the European currency since the inception of the euro, all exacerbated by a slowdown in e-commerce growth that has been well documented and lingering supply chain problems for companies of all sizes.
We were building to match economic growth and are now facing significant headwinds that simply did not exist six months ago. We expanded our workforce too quickly in anticipation of continued economic growth and that decision rests with us.
After assessing the current market conditions and the uncertainty we see in the e-commerce sector, this was the most prudent action to take and necessary to:
- Make sure we can support as many founders as possible, today and in the future, in their growth trajectory and;
- To emerge from this economic downturn as a sustainable and profitable company
To those who leave 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 if it weren’t for you and your efforts, there’s no way we could have built Clearco into the category leader it is today. We are so grateful to have had you as part of this journey.
Our People team will work with each departing employee to ensure they are supported during this transition, including:
- providing severance pay;
- two years to exercise equity;
- comprehensive health insurance; and
- job 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 ethos has always been to support entrepreneurs in their growth and scale-up, especially those who historically have been unable to obtain financing. Even during a recession, we are committed to helping fund as many founders as possible. We know we must do everything we can to support the 10,000+ founders who have taken more than $5 billion from us, the people who need the capital most.
Resilience is in every entrepreneur’s DNA. They inspire who we are as individuals and as a company. We’ve run this business countless times, from financing Uber drivers to Airbnb hosts, all after being told that monetization financing would never get off the ground. We created a category and now there is a company that looks 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 purpose than ever.
– Michele & Andrew