Clearbanc cuts staff to navigate ‘long-term economic impacts’ of COVID-19
Clearbanc, a Toronto-based company that funds startups through equity-free investments, has laid off 17 employees to help it navigate the long-term economic impact of COVID-19, TechCrunch has learned.
The cuts impact about 8% of the staff, affecting roles ranging from office managers to recruiters and sales. Co-founder Michele Romanow says the company will use its connections to assist those affected by the layoffs to search for other work, and offer extended benefits through the end of the financial quarter.
Clearbanc has been noisy in its journey toward being a venture capital alternative for startups. Just last week, Clearbanc announced a new financing product to help startups avoid cutting staff and stay operationally afloat: Clearbanc Runway. And last year, it pushed out its “20-minute term sheet” to sell equity-free capital with a promise of founder friendliness. The model has seen the startup disburse $1 billion to nearly 2,200 companies so far, per its accounting.
In July 2019, the fintech company raised a $250 million fund and $50 million in equity to broaden its investment goals. The co-founders say Clearbanc is continuing to see an increased demand for its capital. It hired more than 140 people last year alone.
Clearbanc is in a somewhat unique position during this downturn, as it largely funds e-commerce businesses that have seen an uptick in usage as brick-and-mortar stores becomes less of an option due to social distancing.
However, last week, co-founder Andrew D’Souza pointed to unpredictable market conditions: “There’s a lot of volatility and a lot of uncertainty,” he said.
“We’re certainly going to be more conservative than we would have been six months ago. It probably looks like us writing smaller checks, more frequently,” he told TechCrunch last week.
Today’s layoffs, according to the company, don’t directly impact Clearbanc’s ability to cut checks. Instead, the Clearbanc cuts signal that layoffs aren’t reserved for the time when the dry powder runs out. As the pandemic draws out, we’re learning that sometimes it’s a bit more preemptive than that.
A storm of layoffs have impacted a wide range of startups and industries across the world. While travel and hospitality companies have felt the blunt of the pandemic’s economic impact, broader cuts show that sales and recruiting teams from other industries are also vulnerable. Layoffs have been so ubiquitous that platforms have risen to help those laid off find their next gig. And in a time where uncertainty rules week to week, any effort to create meeting grounds for those with this tough shared experience is much welcome.