Toronto-based FinTech startup Borrowell has laid off approximately 20 percent of its staff, as the impacts of the COVID-19 pandemic continue to sweep through the Canadian tech sector.
Borrowell has let go of 15 employees on its 75 person team, representing a 20 percent company-wide layoff across departments. The FinTech startup has confirmed the layoffs to BetaKit, with co-founder and CEO Andrew Graham citing COVID-19 as the catalyst for the decision.
“The qualification criteria [for the wage subsidy] need to be changed, and there is no time to lose.”
Borrowell offers a variety of financial services for individuals, spanning credit monitoring and cards, personal loans, mortgages, investing, insurance, and banking. At a time when Canadian individuals and businesses are facing financial difficulties, even companies like Borrowell do not seem to be immune to the economic impacts of the pandemic.
“The economic fallout from the coronavirus pandemic is touching all parts of the economy, including financial services,” Graham told BetaKit. “While consumer concern about finances has skyrocketed, many financial institutions are pulling back on writing new business, which impacts us.”
As a company that refers and matches individuals with financial institutions, those institutions being less open to new clients has had a direct impact on Borrowell.
The CEO noted that the “difficult decision” to reduce its workforce was a move to “ensure that [Borrowell] can thrive as a company in the long term.”
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While the federal government has taken steps to help support individuals and businesses financially during this period, a survey conducted by Borrowell a couple of weeks ago found that three in four Canadians reported experiencing financial stress due to COVID-19. With finances tight, many surveyed quoted being able to afford basic necessities such as food and rent as their top concern.
Graham has been vocal online about the government steps being taken to support businesses. The CEO originally called for the government to introduce a wage subsidy program and applauded when the expanded 75 percent subsidy was announced.
However, Graham has now joined other tech organizations and CEOs in lamenting that the program as it currently stands is not inclusive of the innovation sector. He noted that Borrowell may not qualify for the subsidies.
“The government’s wage subsidy program is very important for helping small businesses, but as currently formulated, it doesn’t seem designed for companies like Borrowell that have grown quickly,” he told BetaKit. “The qualification criteria need to be changed, and there is no time to lose.”
Graham is one of the hundreds of CEOs who are part of the Council of Canadian Innovators (CCI). The lobby group has also been vocal in asking the federal government to expand the criteria of the subsidy program beyond a decrease in revenue, something many innovation companies do not use to calculate a decrease in business activity.
A recent survey by CCI conducted after details on the program were announced last week found that 40 percent of Canadian tech CEOs have already laid-off employees, with 82 percent planning layoffs for the coming weeks.
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Founded in 2014, Borrowell offers free credit score and report monitoring, automated credit coaching tools, and AI-driven financial product recommendations. In 2019, the startup topped one million users, around the same time closing a $20 million Series B co-led by White Star Capital and Portag3 Ventures.
In December, Borrowell ventured into a new business category, launching a suite of digital tools to help consumers track, manage, and pay bills on time. At the time, Graham noted that the idea was to help individuals relieve financial stress by helping to ensure that bills get paid on time.
Borrowell joins a growing list of Canadian tech companies, that like many businesses across the country, are making decisions about reducing their workforce as the financial and economic impacts of COVID-19 grow. Some of the companies that have been affected include Ritual, Mogo, Ecobee, Rangle, Hopper, Opencare, amongst others.
Image courtesy Borrowell