Planswell shuts down

Planswell

Toronto-based FinTech startup Planswell is no more. In a notice posted on the company’s website, Planswell indicates that all 57 employees have lost their jobs as a result of the startup’s shutdown.

Planswell provided a financial planning service to Canadians, allowing them to quickly build financial plans, while also acting as a brokerage to connect them with mortgage, investment, and insurance offers. The company had previously claimed to have built over 150,000 financial plans for Canadians.

“We screamed in silence, for a month, as the world crashed down around you. Our leadership spent every waking moment on emergency calls and in board rooms while our team broke client service records… it wasn’t enough. Our hearts were ripped from our chests. You could not be saved.”

“Most of our clients come to us from banks, financial advisors, and robo-advisors,” said Eric Arnold, co-founder and CEO of Planswell, told BetaKit in June 2018. “They’re usually on track to spend hundreds of thousands of dollars in excess fees and interest charges, and they almost never have a proper plan. We give them an excellent plan for free and access to mortgages, investments, and insurance that can save them a ton of money. It’s rewarding to see the positive impact we’ve had on so many people.”

The company says that those investments, mortgages, and insurance plans will remain untouched, and has provided customers instructions on how to transfer their portfolio management to other robo-advisors here. Planswell Portfolios, a separate company that licenses its name from Planswell Holdings, will continue to manage customer portfolios until the end of November.

The announcement comes just over a month since an anonymous former Planswell employee, calling themselves Jane Doe, publicly raised allegations of sexual harassment from a Planswell co-founder during their time at the company. At the time, BetaKit confirmed the company’s awareness of those allegations as early as February of this year. Shortly after, the company publicly posted a statement of belief and apology on its Twitter account towards Jane Doe, attributed to Arnold.

BetaKit has yet to confirm if those allegations played a role in the shuttering of Planswell, and the company’s statement posted on its website does not specifically indicate the reason for the shutdown. However, certain passages indicate significant difficulties over the last month.

“[Planswell was] built on a series of miracles,” the statement reads. “We were one miracle short…”

“We screamed in silence, for a month, as the world crashed down around you. Our leadership spent every waking moment on emergency calls and in board rooms while our team broke client service records… it wasn’t enough. Our hearts were ripped from our chests. You could not be saved.”

The statement makes no mention of Jane Doe or their allegations of sexual harassment.

RELATED: Planswell CEO attributes company downfall to “social media storm” in investor email

Founded in 2015, Planswell had raised just under $18 million in financing throughout its lifespan. In January of this year, Planswell announced it had raised $4 million in seed funding from undisclosed investors, with 13.8 million in additional funding coming in 2018 from two separate rounds.

The startup told BetaKit earlier this year that it was planning to raise a new round in the second half of 2019, and was set to announce a partnership with a major financial institution. Planswell did not disclose the name of the partner at the time, nor has it disclosed any of the investors involved in its previous raises.

However, sources with intimate knowledge of the company told BetaKit that despite the recent funding, Planswell’s demise was essentially due to running out of money. The Logic has published similar reports, citing internal emails showing that the startup has been plagued by a lack of capital as far back as December 2017, in addition to heavy operating losses.

The Logic cites two mutual funds at Fidelity Investments for supplying Planswell with $4 million in needed capital in 2018, as well as a pilot project with Sun Life earlier that year, which contributed $300,000 plus $4 million in warrants, giving the financial services company a 10 percent ownership stake in the startup. According to a source The Logic spoke with who worked on the project, Sun Life was planning to formally announce the partnership when the allegations of sexual harassment were made public.

Rumours of the company’s shutdown have been a source of public conversation within the Canadian tech community over the past week, with companies offering support for those laid off on Twitter and Facebook.

At time of publishing, Planswell has not responded to multiple requests for comment.

Developing…

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.