Two more fast-growing Canadian tech startups, TealBook Inc. and Symend Inc., have slashed their workforces in an effort to keep costs in check amid economic uncertainty, the latest cuts in a sector that has shed nearly 128,000 jobs this year.
Calgary-based Symend, whose software is used by telecommunications companies and banks to improve collection rates from delinquent customers, laid off 13 per cent of its staff this quarter and now has 234 employees, CEO Hanif Joshanghani said in an interview. The company also said Thursday it had raised US$40-million in fresh capital.
Meanwhile, Toronto-based Tealbook this month cut 19 per cent of its workforce, or 34 jobs, less than a year after the supply chain software startup raised US$40-million in its most recent venture capital funding.
“The market has changed dramatically,” TealBook CEO Stephany Lapierre said on a blog announcing the cuts. “Access to capital has decreased by a much as 80 per cent and raising additional capital in this environment is challenging. While it’s impossible to predict the economy or the markets, we need to plan conservatively so we can operate even in the worst scenarios, but still be in a position to capitalize when the time is right.”
The cuts add to a rapidly growing list: globally, 814 tech companies have laid off 128,865 people this year according to layoffs.fyi, including massive cuts this month by tech giants Amazon, Meta and Twitter.
The cuts reflect a rapidly changed environment that has seen startups shift from a “growth at all costs” mentality to more prudently deploying capital following a crash in valuations and mounting concerns about a recession and the ability to access capital.
“You’re not going to survive on 12 months of cash right now,” Ms. Lapierre said in an interview, adding that with the recent layoffs, her company now 40 months of cash. “We’re preparing for the worst and if the worst doesn’t happen we’re in an awesome position
Tealbook and Symend have been fast-growing success stories; on Wednesday, Symend claimed seventh place on Deloitte’s annual list of Canada’s fastest growing startups, with revenue growth of 4,366 per cent over three years. (other startups on the list, including ApplyBoard Inc., Ada Support Inc., Alaya Care Inc. and CFT Clear Finance Technology Corp., have also cut staff this year.)
Both have also completed major updates to their software this year aimed at expanding their functionality and market potential. Mr. Joshanghani said the cuts largely affected Symend’s research and development department after the company launched an expanded version of its software platform, which combines artificial intelligence and behavioral science to help billers collect from non-paying customers in a more effective and empathetic way.
Symdn spent much of its last, US$43-million financing, announced last year expanding the platform to allow clients to handle more customer service functions than delinquent collections. But after that work was done, “we had some rebalancing of the workforce,” Mr. Joshanghani said. Symend cut jobs in product development “so we could make room” to hire in other areas, notably “go to market” functions such as sales and marketing.
“We’re focused on growing very intentionally and thoughtfully as far as where we make our investments. Ultimately this was about making budgetary room for an intentional market expansion.”
Symend’s fundraising reflects the grim mood in the sector: despite its rapid growth, the funding values the company at the same level as its last financing, two sources familiar with the situation said. The company declined to comment on valuation although Mr. Joshanghani said “we’re really happy with the terms” and said the cash infusion gives Symend “a bullet proof, strong balance sheet.” Many companies have raised money at lower valuations this year than their prior financings.
The funding was led by past investor Inovia Capital and backed by existing investors Impression Ventures, Mistral Venture Partners, BDC Capital’s Women in Technology Fund plus new investors Export Development Canada, Plaza Ventures and BDC’s Growth Venture Co-Investment Fund.
Ms. Lapierre, meanwhile, said the update to Tealbook’s platform would increase the amount of supplier data that companies use to assess their supply chains and increase the revenue potential of the business. But after spending the last year improving the platform she said TealBook needs to “slow down a bit and make sure we successfully launch our platform” while dealing with emerging economic challenges such as budget cuts, layoffs and hesitancy to spend among clients. “If we’re proactive and slow down a bit, make sure we have the cash and runway to deliver the platform we want to come of the other side stronger, she said.
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