A Shopify Inc.-backed ecommerce delivery startup has laid off roughly 30 per cent of its staff, joining a wave of Canadian startups that have begun cutting jobs to gird for an uncertain economic and funding environment.
Aadil Kazmi, CEO and co-founder of Toronto-based Swyft Technologies Inc., confirmed in a text that his startup has laid off 10 of its staff in Canada and the U.S. “to hyper focus on the core business.” According to LinkedIn, there are 34 employees at the company, which has provided same-day local delivery for ecommerce brands including Knix, Kotn and Lush Cosmetics. Swyft is the latest in a slew of startups around the world that were trying to offer quick delivery service to smaller merchants but that are now cutting jobs.
The layoff is taking place 16 months after Swyft announced it had raised US$17.5-million in venture capital led by Inovia Capital and San Francisco’s Forerunner Ventures and backed by Shopify. The cut will help the company preserve cash so it has enough to fund operations for two years.
Several Canadian venture capitalists told The Globe and Mail in the past week that many portfolio companies are either considering layoffs including sweeping “reductions in force” or had already started. Several Canadian companies such as Thinkific Labs Inc., Goodfood Market Corp., Sensibill Inc. and Get ResQ Ltd. have cut jobs or, in the case of bank challenger Wealthsimple Technologies Inc., frozen hiring.
The layoffs are part of a sector-wide belt-tightening that has been more evident in the U.S. as unprofitable tech companies, pushed by investors, look to reduce their “burn” – the pace at which their cash reserves dwindle – and extend how long they can pay for their operations with existing funds. The shift follows a talent crunch in the industry that resulted in sharply rising compensation for workers.
According to website Layoffs.fyi, which tracks tech-sector layoffs globally, the second quarter has already been the biggest three-month period for layoffs since early in the pandemic, with 162 layoff events and 27,715 job losses as of Tuesday. Many U.S. tech companies have instituted hiring freezes, including Facebook parent Meta Platforms Inc., Salesforce, Inc. and Intel Corp.
The industry’s new-found austerity contrasts with the previous “grow-at-all-costs” mentality fueled by cheap capital, COVID-19 stimulus spending and an accelerated shift to digital channels during lockdowns. That led to record venture-capital fundraising and a boom in initial public offerings.
Since then, however, rising inflation has prompted interest rates hikes and supply-chain challenges have worsened owing to the war in Ukraine, prompting a selloff of tech stocks. The median valuation of cloud software stocks is at a five-year low, according to Bessemer Venture Partners’ Nasdaq Emerging Cloud Index.
Mr. Kazmi started Swyft after being inundated in his previous job as an engagement manager with Amazon by independent merchants he knew. They wanted to know how they could get faster, affordable shipping for their online orders, just like Amazon offered, and just as it had conditioned online shoppers to expect. He quit his $200,000-a-year job in 2020, abandoned his stock options and quickly established Swyft.
The company was founded as a provider of previously unattainable Amazon-level delivery service at affordable prices to merchants in Toronto, Vancouver and Ottawa. The plan wasn’t to hire drivers or operate warehouses but function as a business-to-business marketplace, providing software that plugged into courier operations on one side and merchants, who paid a monthly fee for the product, on the other.
Swyft raised $3-million in June, 2020 in seed financing co-led by Golden Ventures and Trucks Venture Capital, and had plans to expand aggressively across North America.
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