Toronto's FinTech Clearco lays off 25% of staff

Clearco, a Toronto-based fintech capital provider for online companies, tells journalist that it has laid off 125 people, or 25% of its entire staff. Those impacted will receive severance pay, a two-year window to exercise equity and job transition support from the leadership team, according to Clearco. The company did not say which teams and roles were impacted, or if any C-suite members were let go.

Since launch, the startup, formerly known as Clearbanc, has been built around helping e-commerce businesses land non-dilutive capital, sales and deals. Now, as consumers pull back, e-commerce surge is turning creaky; challenging startups such as Clearco that depend on a constant stream of activity from the cohort.

Michele Romanow, Clearco CEO and co-founder, and Andrew D’Souza, co-founder and executive chairman, sent a memo to staff Friday morning citing the macroeconomic environment as reasoning for the latest workforce reduction.

“We have rising interest rates not seen since the mid-90s, the highest inflation in four decades, one of the biggest swings in European currency since the founding of the Euro, all compounded with a slowdown in e-commerce growth that’s been well documented and continued supply chain issues for companies of all sizes,” the duo wrote in a memo. Alongside the layoffs, Clearco said that it is “considering strategic options” for its international options. After starting in Toronto, Clearco launched in the U.K., Netherlands and other EU markets through 2021. But the expansion hasn’t been all smooth.

Clearco expanded to Germany in June but simultaneously cut 10% of its staff in Ireland, just three months after breaking into the market and announcing plans to hire over 100 employees, reports Independent.ie. It’s unclear if there are more geographically focused layoffs to come, or what exactly “strategic” options there are — but we do know that Clearco does have lots of international competitors.

A Clearco spokesperson wrote over e-mail that the company is not taking any interviews today and did not clarify the future of the startup’s international positions. The startup previously conducted another round of layoffs in March 2020, a reduction that impacted 8% of staff then reasoned to the “long-term economic impact of COVID-19.”

D’Souza stepped back from his role as chief executive of the company in February but continues to be the largest shareholder in the business.

D’Souza’s departure from the chief executive role came as the business began hinting at a need to focus on financial results. “For a company of our level of maturity, candidly we built this company in a time where capital was cheap and it was growth at all costs,” D’Souza said in February. “And now we’re moving into a time where you balance capital efficiency and growth — we have to start putting out forecasts and hitting those forecasts.”

He added: “Those things come much more naturally to Michele and less naturally to me, and that was just going to be the job of a CEO as the company got more and more mature.” Romanow has been in the chief executive role for nearly five months.

It’s been around a year since Clearco announced that it secured funding from SoftBank, a $215 million tranche closed just weeks after the company landed a $100 million round that quintupled its valuation to $2 billion.

Romanow and D’Souza’s full memo is below: