Saskatoon software startups Vendasta, 7shifts, Andgo Systems make layoffs

Vendasta CMO: “Every tech company right now needs to be thinking about profitable growth.”

A trio of Saskatoon-based software companies have joined the growing list of Canadian technology startups to cut staff amid a sector-wide downturn.

Vendasta, 7shifts, and Andgo Systems recently laid off employees, BetaKit has learned. In Vendasta’s case, the move follows a slew of recent acquisitions and marks part of a push toward profitability as investor priorities have shifted. For 7shifts and Andgo, they come after both startups failed to meet growth targets as economic conditions have deteriorated.

These three Saskatchewan startups are far from alone. Amid rising interest rates to combat mounting inflation, small, large, emerging, and established Canadian tech companies across a wide variety of sectors and regions have cut staff and adjusted their priorities.

7shifts and Andgo’s layoffs come after they failed to meet growth targets as the economy has deteriorated.

For many, this has been to preserve cash and expedite their path to profitability as venture capital and debt financing have become harder to come by and investor priorities have shifted. For some, these moves have come after their growth has slowed as their customers have cut back or adjusted their buying habits.

Vendasta, 7shifts, and Andgo’s layoffs add to what has already been an especially tough year for tech layoffs. Other Canadian tech firms that have cut staff in recent months include Paper, Athennian, Top Hat, Fable, Dapper Labs, and Loopio. Per, at publication time, 1028 tech companies globally have shed nearly 239,000 employees since the beginning of January.

Vendasta co-founder and CMO Jeff Tomlin confirmed to BetaKit that the company had recently made layoffs as part of a push toward profitability. However, he declined to disclose how many Vendasta employees or what percentage of the firm’s team was impacted by these cuts. Per LinkedIn, Vendasta currently has 647 employees.

“Given the way the market is valuing companies we have adjusted our plan to reach profitability by the end of the year and hope to maintain or exceed the rule of 40 percent,” said Tomlin. “This means profitable growth versus growth at all costs. Every tech company right now needs to be thinking about profitable growth.”

RELATED: Canadian startup struggles continue as Silofit closes up shop, Top Hat and Fable cut staff

Saskatoon-based Vendasta sells digital tools to companies that serve small and medium-sized businesses. The company put its plans to go public on hold in 2021 and instead closed $119.5 million CAD in venture funding. Since then, over the past two years, Vendasta has acquired four companies—including Broadly, Yesware, Matchcraft, and CalendarHero—and Tomlin indicated that the firm’s recent layoffs were related.

“Any time that you go through acquisitions and high growth there is a duplication and realignment of teams typically resulting in staff changes,” he added. “There were not a large number of people laid off and changes were not isolated to a single area.”

For Vendasta, these cuts come just over a year after the company made another round of layoffs, citing culture fit and a push to centralize functions that were duplicated across the organization. Asked whether the company has had to make any other layoffs amid these conditions beyond these two rounds, Tomlin said the firm has “not seen a downturn that necessitated mass layoffs.”

Fellow Saskatoon-based startup 7shifts, which provides team management software to restaurants, recently laid off 30 employees, representing approximately seven percent of its workforce. VP of marketing Libby DeCamps confirmed 7shifts’ layoffs to BetaKit, sharing the internal letter the company sent to its staff.

RELATED: Vendasta acquires customer engagement platform Broadly

This letter noted that 7shifts closed $102 million in Series C financing in February 2022 “at the peak of high market conditions and valuations.” Following this round, 7shifts laid out plans to invest in product development and push further into the employee lifecycle, “ambitious revenue targets,” and grow its team accordingly. While the company made slight adjustments to its hiring plans, it stuck to this roadmap into this year.

However, per the letter, deteriorating economic conditions eventually forced 7shifts to adjust its strategy: “As the market and macro environment has shifted, we are no longer trending towards the ambitious revenue targets we had set for ourselves in 2023. We are feeling the impact of negative economic conditions and high interest rates on restaurants today.”

These factors led 7shifts “to take preventative measures to right-size the business in order to navigate towards a path to ensure that 7shifts can continue to serve the growing needs of restaurants,” according to the letter.

“Given the way the market is valuing companies we have adjusted our plan to reach profitability by the end of the year and hope to maintain or exceed the rule of 40 percent.”
– Jeff Tomlin, Vendasta

Fellow Saskatoon-based startup Andgo, which sells scheduling software to help organizations automate onboarding employee absences, filling vacant shifts, and annual vacation planning, has taken a similar step.

Andgo co-founder and CEO Thomas Ross confirmed to BetaKit that the startup recently laid off nine members of its team after failing to meet its previously forecasted growth projections. According to LinkedIn, Andgo currently has 62 employees.

“While Andgo continues to grow at a rapid rate, our growth has unfortunately not kept pace with our earlier forecasted projections in the near term,” said Ross. “As such, Andgo made the difficult decision to right-size our workforce to address this new reality.”

These cuts come roughly a year after Andgo closed $5.6 million in Series A funding co-led by Boston’s Waterline Ventures and Toronto-based First Ascent. According to Ross, they come as the sales cycle for high-value enterprise tech has “extended significantly” in the past 12 months as economic conditions have deteriorated.

Feature image courtesy Vendasta.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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