Online furniture seller cuts 216 jobs as Canadian tech layoffs mount

Andy Proshazka, chief marketing officer and co-founder of Artal Furniture, poses for a photo in Vancouver, Wednesday, Jan. 30, 2019.Daryl Dick/The Globe and Mail

Layoffs continue to rise at Canadian tech startups as the economic outlook deteriorates.

On Thursday, three Canadian companies – online furniture retailer article and online marketing technology supplier Unbouce Marketing Solutions Inc. and Flyp Technologies Inc. (commonly known as Uberflip) – About 300 layoffs between them. The CEO of RenoRun Inc. The fourth to deliver building materials to the web, told tech news site BetaKit, that his Montreal startup has laid off 70 of its 600 employees and temporarily halted expansion into new markets. It came six months after RenoRun announced it had raised $142 million led by hedge fund giant Tiger Global Management, which has largely pulled out of the sector after flooding start-ups and expansion with cash in recent years.

Several other companies have already announced layoffs, while more are still quietly leaving people. According to Layoffs.fyi, a website that tracks cuts in the sector, more than 65,500 people have lost their jobs at 477 startups this year internationally. “We’re closer to the start than the middle,” said Maria Basilla, managing partner at Vancouver-based Pender Ventures. “I think with the uncertainty around the economy, we’re going to see continued layoffs and a slowdown in hiring on average.”

It’s a stark contrast to last year, when tech companies flooded markets with initial public offerings and raised record amounts of private capital at sky-high valuations. Since then, rising inflation and interest rates, supply chain challenges and a slowing economy have weighed heavily on valuations. Firms that were unprofitable or required funding to keep growing — or those that were spending excessively to meet pandemic-fueled growth that did not materialize — had to decline.

This is what happened to the article, which is officially called TradeMango Solutions Inc. Eight months ago, CEO Aamir Paige was preparing to list his company in Vancouver. Which has an annual turnover of about 500 million US dollars, publicly. The article shrugged off that plan as markets plunged in January. Now, Mr. Paige admits – as did the CEO of Shopify Inc. Toby Luttke a week ago when he announced the layoffs of 1,000 employees – he mistakenly assumed that the rapid shift to online shopping during the pandemic would continue when life returned to normal. Instead, sales have since returned to pre-COVID trends, Mr. Baig wrote in a LinkedIn post announcing the layoffs of 216 people, or 17 percent of employees.

Mr. Page blamed himself, saying that the company’s financial outlook “showed that we were running the business at a volume greater than current demand could sustain. Simply put, we were living beyond our means. I needed to scale our business to regain our financial position.” Meanwhile, Uberflip has cut 31 people while Unbounce has let 47 people go, both due to economic uncertainty, the CEOs said on LinkedIn.

Dragon Dean star Michele Romano also admitted last week that her e-commerce finance firm CFT Clear Finance Technology Corp. It has grown very quickly in anticipation of international growth that has proven “unsustainable” this year. Clearco cut 125 jobs, or 25 percent of employees, last week. Clear is also facing challenges with a rising cost of capital and customer defaults in some markets, which prompted it to briefly stop providing cash advances to customers last month to tighten underwriting practices and raise fees.

The news is not uniformly bad across the sector. The CEO of Lightspeed Commerce Inc. said: , Jean-Paul Chauvet, said his company in Montreal, which sells point-of-sale software to restaurants, retailers, golf courses and hotels, is benefiting as their customers flock back in person and cling to his company’s revenue growth forecast for this year. “For us to get to these numbers, that means we need to keep hiring” and investing, he told analysts on a conference call on Thursday.

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