Truelayer, which was once a Fintech Unicorn (valued at over $1 billion), has made the decision to cut around a quarter of its workforce.
This appears to part of Truelayer’s overall business strategy to substantially lower costs and attempt to move towards profitability in order to meet investors’ expectations.
The London-headquartered Fintech has laid off 71 workers at the end of September, only a week prior to reporting a substantial $50 million round that saw its valuation drop, according to sources familiar with the matter.
Sources also claimed that workers had been given a 2-hour notice for a meeting where they were told that there would be job cuts.
The impacted TrueLayer employees reportedly exited the firm on the same day.
Another source also claimed that about 25% of the workforce had been impacted by this move.
A Truelayer representative stated that their recent funding round was considered to be “another vote of confidence” in the business.
The rep also noted that at the same time, they share important steps to chart the path toward profitability, including “streamlining operational costs and a reduction in headcount which took place in September.”
The investment round resulted in Truelayer’s valuation being reduced by around 30%, thus leading to the company losing its Unicorn status, which it was able to attain back in a 2021 funding round (with a valuation exceeding of well over $1 billion).
This recent trend of accepting significantly lower valuations to acquire capital has been seen among various Fintechs in the past few years, as they struggle with the goal of becoming profitable in order address VC investors’ expectations.
Francesco Simoneschi, CEO of the open banking Fintech Truelayer, stated that (in an interview with City AM earlier this year) the funding environment is “way tighter than it used to be.”
In another update, Simoneschi revealed that the Fintech had been focused on restructuring and slashed its headcount to improve its financial stability.
Established back in 2016, Truelayer offers payments solutions by leveraging open banking tech for firms like Revolut and Coinbase.
The firm has reportedly obtained investments from Tiger Global in New York and Fintech Stripe.
The recently announced layoffs by TrueLayer have come after a pattern of hiring and rapid turnovers at the Fintech during the last few years.
Truelayer’s annual reports indicate a drop in headcount to around 346 per month last year, down considerably from 434 in 2022 the same financial year the open banking Fintech let go of around 10% of its employees.
This came after a period of recruitment that almost doubled the staff members on payroll from 231 back in 2021.
It’s worth noting that Truelayer had been able to reduce its operating losses this past financial year. But they still came in at a significant £54.1 million with administrative costs as high as £61.9 million, surpassing the boost in revenue and growing payment volumes.