Several more Canadian technology companies have slashed their workforces in an effort to keep costs in check, the latest cut in a sector that has shed more 130,000 jobs this year.
Calgary-based Symend Inc., whose software is used by telecommunications companies and banks to improve collection rates from delinquent customers, cut 13 per cent of its staff this quarter and now has 234 employees, CEO Hanif Joshaghani said in an interview. On Thursday the company also said it had raised US$40-million.
Meanwhile, Toronto-based TealBook Inc. cut 19 per cent of its work force this month, or 34 jobs, less than a year after the supply chain software startup raised US$40-million in venture capital.
“The market has changed dramatically,” TealBook CEO Stephany Lapierre said on a blog announcing the cuts. “Access to capital has decreased by as 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.”
Also this week Kitchener, Ont.-based learning software vendor D2L Corp. said it had laid off five per cent of staff, while Anshul Ruparell, CEO of Toronto real estate technology startup Properly Inc. said in a blog post his company had laid off 71 employees after Canadian housing market conditions “have deteriorated much faster than we anticipated.” BetaKit also reported Toronto startups League and Swift Medical had recently laid off staff.
The cuts add to a rapidly growing list: globally, 834 tech companies have laid off 134,164 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 after 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 TealBook now has 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 successes. Symend claimed seventh place on Deloitte’s annual list of Canada’s fastest-growing startups this week, with three-year revenue growth of 4,366 per cent. (Others 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 recently completed major updates to their software aimed at expanding their functionality and market potential. Mr. Joshaghani said the cuts largely affected Symend’s research and development department after the company launched an expanded version of its product. The platform, which combines artificial intelligence and behavioural science to help billers collect from non-paying customers in a more effective and empathetic way, now allows clients to handle more customer service functions.
But after that work was done, Symend cut jobs in product development so it 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,” Mr. Joshaghani said
Symend’s fundraising reflects the sector’s grim mood: 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. Joshaghani said he was “really happy with the terms,” adding that the cash infusion gives Symend “a bulletproof, 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 and 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 said updates to TealBook’s platform would increase the amount of supplier data companies use to assess their supply chains and increase the revenue potential of her business. But TealBook needs to ensure the platform relaunch succeeds while dealing with emerging economic challenges such as budget cuts, layoffs and clients’ hesitancy to spend. “If we’re proactive and slow down a bit, make sure we have the cash and runway to deliver the platform we want,” TealBook will emerge stronger from the downturn, she said.
Sean Silcoff