Best Tech News Site: The fintech layoffs just keep on coming

Sunday, November 6, 2022

The fintech layoffs just keep on coming

Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

Wow, I take off one week and come back to all hell breaking loose in the fintech world.

Sadly, it felt like we got news of layoff after layoff.

I’ll attempt to round up as many of them as I can here:

Chime confirmed that it is letting go of 12% of its employees. This equals about 160 people. According to an internal memo obtained by TechCrunch, Chime co-founder Chris Britt said that the move was one of many that would help the company thrive “regardless of market conditions.” In the memo, Britt said that he and co-founder Ryan King are recalibrating marketing spend, decreasing the number of contractors, adjusting workspace needs and renegotiating vendor contractors.
Opendoor announced it was letting go of 18% of its staff. This is around 500 people. Opendoor co-founder and CEO Eric Wu said his company, a publicly traded real estate fintech, was navigating “one of the most challenging real estate markets in 40 years.”
Chargebee has laid off about 10% of its staff. As reported by Jagmeet on November 2, “Chargebee, backed by marquee investors including Tiger Global and Sequoia Capital India, has laid off about 10% of its staff in a ‘reorganization’ effort due to ongoing global macroeconomic challenges and growing operational debt. The Chennai and San Francisco–headquartered startup, which offers billing, subscription, revenue and compliance management solutions, confirmed to TechCrunch that the update impacted 142 employees.”
Stripe lays off 14% of its staff. As reported by Paul, “Stripe has announced that it’s laying off 14% of its workers, impacting around 1,120 of the fintech giant’s 8,000 workforce.” In a memo published online, Stripe CEO Patrick Collison conveyed a familiar narrative in terms of the reasons behind the latest cutbacks: a major hiring spree spurred by the world’s pandemic-driven surge toward e-commerce, a significant growth period and then an economic downturn ridden with inflation, higher interest rates and other macroeconomic challenges.
Danish startup Pleo may lay off 15% of its workers. Jeppe Rindom, co-founder and CEO of Pleo — which less than one year ago raised $200 million at a $4.7 billion valuation — revealed that the company’s new strategy will impact 15% of its roles. He added that “up to 150 of our colleagues may have to leave.” Pleo is a developer of expense management tools aimed at SMBs to let them issue company cards and better manage how employees spend money.
Credit Karma, now a subsidiary of Intuit, has “decided to pause almost all hiring.” This is according to an internal email sent to employees by chief people officer Colleen McCreary. McCreary referenced “revenue challenges due to the uncertain environment.” This was reiterated in Intuit’s fourth quarter earnings call, during which the company shared on November 1 that “all Credit Karma verticals have been negatively impacted by macro uncertainty. Credit Karma experienced further deterioration in these verticals during the last few weeks of the first quarter.”
Remote online notarization services provider Notarize cuts its team by 60 people. A spokesperson told me via email that “the reorganization impacted nearly all teams and the decision was in service to the larger strategy we have been enacting at Notarize, and will enable us to move faster to best serve our customers.” The spokesperson added that in September, one small real estate–focused team was laid off in response to both its strategy shift and “the drastic drop in demand from the specific customers that they served.” The recent layoffs follow a larger layoff in June that impacted 110 people. Prior to that reduction, Notarize had about 440 employees. It currently employs 250 people across the United States.

I wrote this newsletter on November 3 because I’m leaving on a trip to celebrate my 20th wedding anniversary, so it’s possible that more layoffs took place between then and now. :( What this means for the broader fintech world is not yet clear, but when well-funded companies such as Chime, Stripe and Pleo are cutting staff, it is no doubt sobering for all the players — small or large — in the space.

Special thanks to TC senior reporter and very nice guy Kyle Wiggers for helping me draft the Weekly News and Fundings and M&A sections below so I could get offline and pack for my trip!

Weekly News

Jeeves, the fintech startup that recently raised $180 million at a $2.1 billion valuation, told TechCrunch via email that it has launched a service called Jeeves Pay that it’s billing as a “credit-backed business payments solution” for enterprise customers. At a high level, Jeeves Pay lets customers use their existing credit line to send wires or pay vendors, ostensibly solving the problem of having to rely on cash or revenues to fund local and cross-border business and vendor payments. Jeeves Pay is available now to all Jeeves customers “where permitted by applicable local laws and regulations,” the company says.

Brex sees startups as one of the key avenues to growth in the corporate card and spend management market. To that end, the company on Wednesday announced a partnership with Techstars to extend Brex services to companies within the accelerator, following similar tie-ups with Y Combinator and AngelList. For the duration of the accelerator, Techstars participants will get a Brex platform support team, access to exclusive Brex events and free use of Brex’s Pry financial forecasting platform. In an interview with TechCrunch, Brex CEO and co-founder Henrique Dubugras described the move as a customer acquisition play.

At Disrupt, TechCrunch interviewed Brex’s Dubugras onstage about the company’s recent change in strategy, which involves a stronger emphasis on software and the enterprise. A piece for TC+ breaks out the juicy highlights from the conversation, including why Brex decided to stop serving businesses funded outside the venture capital structure and the implications of the company’s layoffs earlier this year.

Also at Disrupt, Ramp CEO Eric Glyman, Airbase CEO Thejo Kote, and Anthemis partner Ruth Foxe Blader participated in a roundtable about competing in the increasingly crowded spend management space — a space, it’s worth noting, that’s estimated to be worth tens of billions of dollars. Glyman and Kote shared how they’re working to preserve capital, while Blader offered up some of the advice she’s giving to her portfolio companies. Our TC+ recap has the highlights.

How can finance-focused proptech startups survive the downturn? In an exclusive for TC+, we asked three seasoned investors to give their perspectives. One of the major takeaways: The chances of survival are higher for proptech startups that let consumers fractionally invest in properties and increase access for those seeking a rent-to-own approach. Another: Companies that help others navigate tough times seem to be in special demand.

Are landlords and tenants finally ready to ditch paper checks? JPMorgan Chase is betting that they are. The bank this week launched a pilot platform for property owners and managers that automates the invoicing and receipt of online rent payments. The market is enormous — JPMorgan estimates that more than 100 million Americans pay a combined $500 billion annually in rent to 12 million property owners — but convincing landlords to move from checks and money orders won’t be an easy feat. Only 22% of rent payments are made digitally today, according to JPMorgan.

And other news

Capchase expands to Germany, to close the funding gap for German SaaS companies.

Ramp announced a new global reimbursement feature so that its customers can pay global employees in more than 175 countries and 80 currencies.

Digital homebuying platform Prevu acquires mortgage technology of Reali, a real estate tech company that announced earlier this year it was shutting down after raising $100 million in 2021.

Marqeta announces Marqeta for Banking, expanding its platform with new banking capabilities.