Thoughtwire and Finaeo are among the latest Canadian startups to make layoffs in recent weeks as companies adjust to a tighter investment landscape and economy.
Thoughtwire CEO Mike Monteith confirmed his company’s layoffs to BetaKit, calling them “modest reductions” in non-engineering roles, but did not disclose the number of employees affected. The startup, which has developed digital twin technology for applications in smart hospitals, buildings, and cities, has also recently rescinded some co-op offers to students.
“Now, with the companies that have kind of lost out on this funding musical chairs that has happened…they just don’t have the money.”
Monteith stated that Thoughtwire had to make some “strategic decisions” due to the pandemic and the current inflationary environment. While the CEO called the cuts modest, BetaKit has received indication that the layoffs were more significant and extended to engineers. BetaKit has yet been unable to independently confirm this information.
Multiple sources told BetaKit that insurtech startup Finaeo has made staff cuts, with one indicating that they were quite extensive, comprising the majority of the company’s team, which sits at 25 people according to LinkedIn. Following multiple requests for comment, Finaeo CEO and co-founder Aly Dhalla declined to confirm or provide context as to the current state of his company, saying only that he could not share details “at this time.”
While the number of employees laid off at each company is unknown, it is clear that the current macroeconomic environment is being felt by Canadian startups across a spectrum of stages, from public companies to early-stage startups.
An uncertain consumer environment, inflation, and suddenly conservative investors have led to many tech companies tightening their belts. Industries that felt the boom effects of COVID-19, such as e-commerce, and companies that raised capital at lofty valuations during that time have been particularly affected. Such examples include Shopify, where co-founder and CEO Tobi Lütke was vocal about making the wrong bet on where the future of e-commerce spending was going amid COVID-19, and Wealthsimple, which raised two massive funding rounds in the last two years to reach a valuation of $5 billion before that it was slashed by shareholders.
But startups outside those parameters appear to not be immune to the current environment. The timing of when companies were last able to secure capital is also playing a big part in whether startups are having to adjust their spending.
Speaking with BetaKit recently about the current hiring and firing landscape, Nora Jenkins Townson, founder of human resources consultancy Bright + Early, spoke to the way the current funding environment is playing a role.
“Now, with the companies that have kind of lost out on this funding musical chairs that has happened in the past little bit, it’s not that they’re being conservative,” she said. “It’s not that they’re waiting to see what happens, they just don’t have the money.”
Finaeo might be in the latter category. Crunchbase data indicates that Finaeo’s most recent financing round was a venture round and “non-equity assistance” secured in 2020. The amount was not disclosed.
The startup last announced a financing round in 2019, when it secured $5.35 million CAD seed extension. The round brought the startup’s total funding at that time to $7.6 million. Finaeo’s backers include Luge Capital, RGAX (part of the Reinsurance Group of America), Rising Tide Fund, Inovia Capital, and N49P Ventures partner Alex Norman, who invested as an angel.
The company is an insurtech startup for insurance advisors, co-founded by Dhalla and Donald Chu in 2016. Finaeo launched the beta version of its digital assistant platform in early 2017, looking to connect insurance advisors with an AI-enabled digital assistant and sales coach, informing advisors of upselling and cross-sell opportunities. In the subsequent years, Finaeo adjusted its offering to be a software marketplace that helps independent life insurance brokers with client management and close deals.
For Thoughtwire’s part, the company appears to have raised capital in early 2022, according to Pitchbook data, which shows a $2.33 million round.
Thoughtwire’s backers include Yaletown Partners, BDC Capital, Canadian Business Growth Fund, Greensoil PropTech Ventures, and Export Development Canada. In 2020, the startup raised $11.5 million CAD in debt financing (with a follow-on potential of an additional $9.7 million). That financing round brought Thoughtwire’s total funding raised at the time to $31.5 million CAD.
The Toronto-based startup, which was founded in 2009, uses digital twin technology, which refers to a digital replica of a living or non-living physical entity, to provide real-time guidance to staff so they can predict and resolve issues and achieve energy efficiency.
When it raised the debt financing in 2020, Thoughtwire’s employee base sat at 55 individuals. According to LinkedIn data, that count reached more than 100 people in May of this year. That data also shows that the company’s headcount has been steadily declining since then.
With files from Charles Mandel.