Clearcoa Toronto-based company provider of fintech capital for online businesses, looks back on the international expansion it once touted as the company’s future. A month after cutting 25% of its total workforce, Clearco is making another round of layoffs as it withdraws its international presence in the UK, Germany, Ireland and Australia.
CEO and Co-Founder Michele Romanow tells TechCrunch via email that Clearco had to lay off about 60 additional employees in international teams. The latest downsizing is just one step Clearco has taken in recent months, including previous rounds of layoffs, to refocus its business operations amid the changing e-commerce scene. Like other employees laid off by the company, those affected will receive severance pay, a two-year window to exercise equity and employment support.
As Clearco’s international workforce is reduced, its global clients will now turn to Outfund, an e-commerce investor with operations in the UK and Australia. Clearco describes the “strategic partnership” as one where its international customers – which span Australia, the UK, Germany and the Netherlands – will now be able to come to Outfund for help. Romanow said customers will be transferred to Outfund through a referral agreement, which means Clearco will earn money from the partnership. Outfund, claims Clearco, has pledged to invest £500m in small businesses in 2022.
Clearco, for its part, will refocus on its two largest markets: the United States and Canada, which each represent 80% of its activity. To give you an idea of the scale, Clearco invested more than $3.2 billion in companies around the world, but only $429 million – or 13% – of that activity was in companies outside of these two main markets. The company has partnered with FirePower last year to expand its check writing capability to support both markets.
It’s a move that doesn’t come as too much of a surprise to those who have been following the SoftBank-backed unicorn.
When Clearco cut a quarter of its staff in July, Romanow said at the time that it was considering strategic options for its international operations. Clearco expanded into Germany in June but simultaneously cut its workforce in Ireland by 10%, just three months after entering the market and announcing plans to hire more than 100 staff, reports Independent.ie.
Clearco has a host of international competitors including but not limited to Pipe, Divibank, Uncapped and Wayflyer. Despite the crowded space, Clearco attempted global growth fueled by new venture capital funds. Romanow said “there was huge demand online with the economic growth we’ve seen during the pandemic with e-commerce businesses.”
“We were really excited and ambitious about our growth,” she said. “We simply had no way of predicting the current macroeconomic environment, which frankly looks worse in Europe than in the United States. Combined with a slowdown in e-commerce growth, we suddenly had to face internationally significant opposites that simply did not exist six months ago.”
Romanow isn’t the first founder to make multiple rounds of layoffs in quick succession over the past few months. Robinhood, On Deck, Gemini, and Hopin all make the same disturbing list.
The entrepreneur, who co-founded the business with her former partner Andrew D’Souza years ago, said she would “probably stop more before making hiring decisions too quickly, even if all the market signs seem to point in that direction”. ”
“The desire to build an incredible team to support rapid expansion as quickly as possible and the need to be careful 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 tough decisions.”
As for the future of Clearco, it looks like there is more concentration and simplification to come. Romanow admits the product hasn’t always been “the easiest to understand” and changes are being made to the revenue-based funding tools they provide. The company last raised venture capital in July 2021, a $215 million round led by SoftBank Vision Fund II. This funding event closed just weeks after Clearco completed its latest funding round, a $100 million round that quintupled its valuation to $2 billion.