Clearco, a Toronto-based fintech capital provider for online companies, is walking back the international expansion it once touted as the future of the company. One month after cutting 25% of its total staff, Clearco is conducting another round of layoffs as it retracts its international presence in the U.K., Germany, Ireland and Australia.
CEO and co-founder Michele Romanow tells TechCrunch over e-mail that Clearco had to let go of approximately 60 more employees on the international teams. The latest workforce reduction is just one step Clearco has taken over the past few months, including prior rounds of layoffs, to refocus its business operations amid the changing e-commerce scene. Similar to other employees laid off by the company, those impacted will receive severance pay, a two-year window to exercise equity and job support.
As Clearco’s international workforce is cut, its global clients will now turn to Outfund, an e-commerce investor that operates in the U.K. and Australia. Clearco describes the “strategic partnership” as one where its international clients — which span Australia, the U.K., Germany and the Netherlands — will be able to now go to Outfund for support. Romanow said that customers will be transitioned to Outfund through a referral agreement, meaning that Clearco will make money off of the partnership. Outfund, claims Clearco, has committed to invest £500 million in small businesses in 2022.
Clearco, meanwhile, will return to focus on its two biggest markets: the United States and Canada, which both account for 80% of its activity. To give you a sense of scale, Clearco invested over $3.2 billion in companies across the world, but only $429 million — or 13% — of that activity was in companies outside of those core two markets. The company partnered with FirePower last year to expand its check-writing ability to back the two markets.
It’s a move that isn’t all too surprising for those who have been following the SoftBank-backed unicorn.
When Clearco cut a quarter of staff in July, Romanow said at the time that it was considering strategic options for its international operations. 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.
Clearco does have a host of international competition, including, but not limited to, Pipe, Divibank, Uncapped and Wayflyer. Despite the crowded space, Clearco attempted a global growth move fueled by fresh venture capital money. Romanow said “there was huge demand in line with the economic growth we were seeing during the pandemic with e-commerce businesses.”
“We were really excited and ambitious about our growth,” she said. “We just had no way to predict the current macroeconomic environment, which frankly looks worse in Europe than in the U.S. Compounded with a slowdown in e-commerce growth meant we suddenly faced significant headwinds internationally that simply didn’t exist six months ago.”
Romanow isn’t the first founder to conduct multiple rounds of layoffs in quick succession over the past few months. Robinhood, On Deck, Gemini and Hopin all make the same, troubling list.
The entrepreneur, who co-founded the business with her former partner Andrew D’Souza years ago, said that she would “probably pause more before making hiring decisions too quickly even if all of the signs in the market seem to be pointing that way.”
“The desire to build an amazing team to support rapid expansion as quickly as possible and the need to be prudent and think about sustainability and stability first and foremost is a very delicate balance,” she added. “I would encourage other founders to be as proactive as possible, especially with difficult decisions.”
As for the future of Clearco, it sounds like there’s more focus and simplification to come. Romanow admits that the product hasn’t always been “the most simple to understand” and that there are changes coming to the revenue-based financing tools they provide. The company last raised venture capital money in July 2021, a $215 million round led by SoftBank Vision Fund II. That financing event closed just weeks after Clearco completed its most recent financing, a $100 million round that quintupled its valuation to $2 billion.