Another Canadian startup that raised significant venture capital during the pandemic technology boom has scaled back its work force as the sector’s troubles mount.
RenoRun Inc., a Montreal startup building an Instacart-like service delivering construction materials to contractors, on Thursday cut 43 per cent of its staff, or 210 people. It’s the second recent round of layoffs for the company after it cut 70 employees, or 12 per cent of its staff at the time, in August and froze expansion plans. RenoRun, which had more than 550 employees in July, now has 274. The latest cuts were across the company including three of its eight-person leadership team, CEO Eamonn O’Rourke said in an interview.
“We pride ourselves on our people first, and to have to do something like this is tough for everybody,” he said. While Mr. O’Rourke expects RenoRun to more than double revenue in 2022 – a consistent pattern for the company – “the business environment we’re operating in has fundamentally changed.”
Consumer confidence is declining and interest rates are rising in the face of mounting inflation, so “people are inevitably going to stop spending on discretionary spending like remodelling,” which will hurt his clients and impact RenoRun’s business. He said some customers who previously had 12 to 18 months of work booked have seen that dip to six to 12 months.
“The level of uncertainty in both the macroeconomic and the venture capital environment means we need to plan for the worst and reduce expenses. To manage the company’s risks, we’ll focus on serving our base of core customers and doing it profitably.”
Layoffs have swept across the tech sector as companies have had to pivot from a “grow-at-all-costs” mentality to setting out a path to reaching profitability in the face of an expected recession. According to Layoffs.fyi, which tracks startup job losses, more than 700 companies including Shopify, Hootsuite and Clearco have laid off a combined 94,000-plus people in 2022.
Mr. O’Rourke founded RenoRun in 2016 with spouse Joelle Chartrand and her brother Devlin (who has since left) after the couple took a break in California the prior year from running several construction companies together. When Mr. O’Rourke saw how Instacart’s on-demand grocery delivery service worked, he thought the model would be a hit with general contractors, delivering everything from screws to two-by-fours and saving them trips to the store.
RenoRun started operations in Montreal in 2017 with Mr. O’Rourke and team walking onto job sites offering free coffee and a sales pitch. Demand grew quickly and RenoRun expanded to Toronto and the U.S. It raised $25-million in venture capital in 2019 from Canadian and US investors.
RenoRun became a vertically integrated e-commerce merchant, overseeing its logistics with branded vans and uniformed drivers and building technology to handle ordering, route optimization and invoicing, with a warehouse in each market and fed by an array of suppliers.
Mr. O’Rourke felt RenoRun had huge potential serving a US$500-billion remodelling market in North America. At the peak of the tech bubble last year, it raised US$142-million led by Tiger Global Management (the deal was only announced last February). It was one of a spree of deals in Canada by the New York hedge fund as it become one of the world’s most prolific technology investors, only to retreat when the sector teetered.
Mr. O’Rourke had hoped in 2022 for RenoRun to hit US$100-million in revenue, expand from serving five cities – Toronto, Montreal, Boston, Philadelphia and Chicago – to 10 and to keep hiring. But after entering Washington, it decided to stop expanding, trim staff and preserve cash.