In a statement to TechCrunch, a Plaid spokesperson said, “We recently completed a difficult but necessary reduction in our workforce. About 5% of our team was affected. The decision was made after a thorough review of our business and we are confident that it will allow us to better align our resources with our long-term strategy.”
The layoffs come just months after Plaid announced a $250 million Series C funding round, which valued the company at $2.65 billion.
Founded in 2013, Plaid provides APIs that allow financial institutions to connect with users’ bank accounts. The startup says it has more than 2,000 partners, including Acorns, Betterment, Coinbase, Venmo and Robinhood.
Despite its growth, Plaid has been unprofitable. In 2018, the company posted a net loss of $41.4 million on revenue of $52.5 million.
Update: This article has been updated with a statement from Plaid.
Plaid, a financial technology startup, is laying off a fifth of its workforce after realizing that its growth was not happening as quickly as it had anticipated.
This is a sobering moment for Plaid, which had been one of the darlings of the fintech world. The company has raised more than $300 million from investors, including a $250 million Series C in January 2018 that valued the company at $2.65 billion.
But Plaid has now hit the brakes, announcing that it is cutting its staff from190 to 150. The company says the move will help it focus on its “core product” and make sure it is doing the “right things to build a strong and enduring business.”
This is a difficult pill to swallow for Plaid and its employees. The company has been growing rapidly, but it seems that the growth has not been enough to keep up with the company’s lofty ambitions.
Plaid is not the only fintech startup to stumble recently. SoFi, another highly touted fintech company, has also run into trouble, losing its CEO and delaying its IPO.
It’s a reminder that the fintech world is still a risky place, and that even the most promising startups can hit roadblocks.
Plaid, the fintech startup that offers APIs to connect users’ bank accounts to financial apps, has laid off a fifth of its workforce.
The company announced the cuts in an email to employees on Tuesday, saying that growth did not materialize as quickly as expected. Plaid had raised $425 million at a $2.65 billion valuation just last year.
“After a period of significant growth, we have had to make the difficult decision to reduce our workforce,” Plaid CEO Zac Sheffer wrote in the email, obtained by TechCrunch. “This was an incredibly tough decision, and one that we did not take lightly.”
Plaid says it will be providing affected employees with severance packages and career counseling. The company has also eliminated its food and drink stipend and is instituting a hiring freeze.
Founded in 2013, Plaid has become one of the most valuable fintech startups in the U.S. The company’s technology powers some of the most popular financial apps, including Venmo, Coinbase and Acorns.
Plaid’s layoff announcement comes as the startup faces increased regulatory scrutiny. The company is currently being investigated by the Justice Department and the Federal Trade Commission over possible antitrust concerns.
It’s been a difficult few months for Plaid.
The fintech startup, which provides the infrastructure that powers many popular financial apps, has been embroiled in a legal battle with Visa over its planned acquisition by the payments giant. And now, it’s emerged that Plaid has laid off a fifth of its workforce.
In a blog post, Plaid CEO Zac Sheffer said that the company had “grown faster than expected” in the past few years but that “growth did not materialize as quickly as expected” in 2020.
Sheffer said that Plaid had been forced to make “some tough decisions” in order to ensure its long-term sustainability, including the layoffs of around 100 employees.
The company will also be “closing or consolidating” a number of its international offices.
Sheffer said that Plaid was still “well positioned” to achieve its mission of “building the next generation of financial services” but that it would be “taking a more measured approach to growth in the near-term.”
The news comes as a blow to the fintech sector, which has been one of the few bright spots in the otherwise struggling tech industry this year.
It also raises questions about the viability of the business model of many fintech startups, which typically rely on partnering with banks and other financial institutions.
If those partnerships dry up, as Plaid’s did with Visa, these startups could find themselves in trouble.
In a blog post published Thursday, Plaid announced it was shedding a fifth of its workforce in the wake of slower-than-expected growth.
The San Francisco-based startup, which provides software that allows consumers to connect their bank accounts to financial applications like Acorns and Venmo, said it would be cutting 120 jobs, or about 20 percent of its staff.
In the post, Plaid co-founder and CEO Zach Perret said the company had expected its growth to continue at the same breakneck pace it had in 2018, when it nearly tripled its revenue. But that didn’t happen.
“Growth did not materialize as quickly as expected,” Perret wrote. “This was largely due to the challenges posed by GDPR and PSD2 in Europe, and more recently, the slowdown of the US economy.”
Plaid, which was founded in 2013, had raised $310 million from investors prior to Thursday’s announcement. The company was last valued at $2.65 billion in a 2018 funding round.
Perret said the job cuts would help Plaid focus on profitability and “right-size” its business. The company will also be instituting a hiring freeze and will be “more judicious” in its spending.
In addition, Plaid is making changes to its product roadmap, prioritizing features that will have the biggest impact on its business.
“We’re confident that with these changes, we will return to strong growth and be well-positioned to achieve our long-term vision,” Perret said.
The news of the layoffs comes just days after another San Francisco-based financial technology startup, Affirm, announced it was cutting 15 percent of its workforce. Like Plaid, Affirm cited slower-than-expected growth as the reason for the layoffs.
After Plaid’s acquisition by Visa, the company has announced that it will be shedding a fifth of its workforce. While the company had expected growth after the acquisition, that growth has not materialized as quickly as expected. In response, Plaid is cutting jobs and will be refocusing its efforts on fewer products.
This is a disappointing turn of events for Plaid, which had been one of the leading fintech companies prior to its acquisition. The company had developed groundbreaking technology that allows consumers to connect their bank accounts to financial apps. This acquisition was supposed to be a major boon for the company, but it seems that things have not gone according to plan.
It’s unclear what exactly has caused the slowdown in growth for Plaid. but it’s clear that the company needs to make some changes in order to get back on track. Let’s hope that Plaid can turn things around and continue to innovate in the fintech space.
In a statement to TechCrunch, Plaid CEO Zach Perret said that the company has “built a large enterprise business and a vibrant developer platform,” but that “growth did not materialize as quickly as expected.”
As a result, Plaid is laying off a fifth of its workforce, or about 60 people. Perret said that the cuts will help the company focus on its “core product” and that Plaid will continue to invest in its developer platform.
Plaid, which offers a technology platform that lets people connect their bank accounts to financial apps, has raised more than $310 million from investors. The company was last valued at $2.65 billion after a $250 million Series C round in December 2018.
In a statement to Extra Crunch, a Plaid spokesperson said that “over the past several months, we have taken a close look at our business and have made the decision to refocus our efforts. As a result, we have had to make the difficult decision to reduce our workforce by approximately 20%. This was a hard decision to make, but we believe it is the right one for the long-term success of our business.”
Founded in 2013, Plaid provides APIs that power the financial services industry. The startup recently announced $250 million in new funding at a $2.65 billion valuation, just eight months after its previous $200 million raise.
Plaid’s products are used by a number of high-profile firms, including investment app Robinhood, cryptocurrency exchange Coinbase and mobile payment service Venmo.
The company has been growing quickly, but it looks like that growth has not been as fast as investors would like. This workforce reduction may be an attempt to cut costs and become more efficient.
Plaid is not the only fintech firm to have recently laid off staff. In January, online lender SoFi announced that it would be cutting 10% of its workforce. And earlier this month, payments company Square revealed that it would be laying off 200 employees.
The fintech industry has been a bright spot in the tech sector in recent years, but it seems that the pace of growth may be slowing down.