Wealthsimple Technologies, which challenges online banks, has laid off 13 percent of its staff because market conditions have rocked the tech sector, leading to a torrent of job cuts in recent weeks.
During a company-wide meeting on Wednesday, Wealthsimple CEO Michael Katchen announced that 159 employees, out of the company’s 1,262 employees, will be laid off by the end of the day.
Wealthsimple has been one of the most obvious beneficiaries of higher valuations and interest in venture capital during the pandemic. It became one of Canada’s most valuable private tech companies when it raised $750 million last year worth $5 billion.
In 2020, Wealthsimple doubled its assets under management to $9.7 billion compared to the previous year. But Mr. Katchen says customers are now “experiencing a period of market uncertainty that they have never experienced before.”
As a result of market conditions, Mr. Katchen said in a note to employees after the meeting, the company should “laser” focus on its core business, such as investment and banking. He also stressed the importance of Wealthsimple’s crypto offering, despite the slump in the crypto markets and the 65 percent drop in the price of bitcoin since November.
Meanwhile, Mr. Katchen said, the company will reduce investments in areas such as peer-to-peer payments, tax and business services, and will restructure its staffing, marketing, customer success and research teams.
Wealthsimple halted hiring last week, and just over a month ago its largest shareholder, IGM Financial, disclosed it had cut the value of its stake in the company by 20 percent with the sale of publicly traded technology shares. Spread in private markets.
The layoffs are part of a worldwide sector-wide trend where a number of unprofitable tech companies – particularly in the US – are cutting operating expenses in an effort to extend the amount of time they can fund operations with existing capital. In addition, the shortage of workers in the technology industry has led to sharp increases in compensation.
According to Layoffs.fyi, which tracks tech sector layoffs globally, the second quarter was already the largest three-month period of layoffs since the pandemic began, with 169 rounds of cuts, resulting in 28,774 job losses as of Wednesday. Several US tech companies have frozen hiring, including Meta Platforms Inc. Parent of Facebook and Salesforce Inc. and Intel Corp.
In Canada, Swyft Technologies Inc. Based in Toronto, this is an e-commerce delivery startup powered by Shopify Inc. , has laid off about 30 per cent of its staff this week, adding to a wave of Canadian startups that have stopped hiring or laying off workers. Month.
Wealthsimple is the first major tech company in Canada to announce more than 150 layoffs. Unlike some of its peers, Wealthsimple is backed by one of the country’s largest financial institutions – IGM Financial, a subsidiary of Canada’s Power Corp, which holds a 23 percent stake in the company. This can help relieve pain for many laid-off workers.
Power Corp was one of Wealthsimple’s first public investors in 2015. Over the years, Power Corp – through IGM and another subsidiary, Canada Life – has supported Wealthsimple’s growth in additional rounds of funding. (Power Corp. already sold a $500 million stake to Wealthsimple in the last round of last year, reducing its overall equity stake.)
Now, IGM and Canada Life are stepping in to help those affected by the layoffs, ensuring job interviews for those interested in working for them.
In the task force’s memo, Wealthsimple also said employees would be given “generous” compensation, health and dental coverage, and accelerated equity awards for those who did not reach required timelines. It will also allow them to keep their company laptops and home office equipment.
With a report from Shawn Silkoff
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