Employees who disappear from Slack without notice. Colleagues attending meetings in the morning, but gone by the afternoon. Others scrambling to apply for jobs, wondering whether they’ll be next to go.

Since the start of this spring, Clearco has downsized its staff while maintaining—both publicly and inside the company—that it has no need for mass layoffs in a difficult environment where many startups are cutting costs. But one current and five former members of staff who spoke with The Logic in recent weeks say Clearco’s shrinking headcount tells a different story. Meanwhile, as rising interest rates put the squeeze on many fintechs, Clearco has taken other steps to free up cash, including raising new funding and scaling back its physical office presence in downtown Toronto.

In recent weeks, the company has been seeking to renegotiate agreements with some of its lenders and find additional investors to reduce the amount it pays on its borrowed capital, according to two employees. Clearco’s goal is to reduce its costs enough that it can have positive free cash flow before the end of the year, said one employee. Still, a second employee said they doubted whether the goal was realistic.

“If they don’t renegotiate interest rates, that goal is in jeopardy,” the first employee said. 

The sources spoke with The Logic on the condition that they not be identified discussing private information.

Clearco’s business depends on borrowing capital from other lenders that it distributes to e-commerce and software-as-a-service companies as advances ranging from US$10,000 to US$10 million. In exchange, Clearco takes a percentage of the company’s revenue. Fintechs, many of which rely on borrowed money to offer financial services to clients, have felt the pinch in recent months as rising interest rates cut into their margins. 

The new agreements would lower the amount of money from its balance sheet that Clearco needs to contribute to the advances it gives to companies, freeing up more cash for operations, one of the employees said. Pranit Tukrel, a former investor at Inovia Capital who joined the company earlier this year, has been leading the recent fundraising efforts, the employee added. 

Clearco spokesperson Nick Rosen-Wachs said the conversations were a sign of a fiscally responsible company. “We’re always looking to lower our cost of capital, especially as we grow and scale,” he said.

A funding round earlier this year may have given Clearco some breathing room as it looks to free up capital. In March, Clearco told staff at a town hall that it had raised a small round of equity financing from existing investors, valuing the company at around US$2.5 billion, according to two current and two former employees. The two current employees said the new funding amounted to roughly US$60 million. The Logic was unable to determine which investors participated in the round.

The latest fundraising valued Clearco higher than the nearly US$2-billion valuation it reached in 2021. It raised US$550 million across two fundraising rounds that year, including one led by SoftBank, which took a seat on Clearco’s board as an observer. It was the first Canadian investment for the prominent global investor, known for major investments in companies including WeWork and Uber. Since then, however, Clearco has significantly raised expectations for its salespeople and slashed new initiatives after failing to bring in as much revenue as expected.

In February, Clearco raised US$80 million in debt from Silicon Valley Bank, including US$20 million in loans, a US$20-million revolving credit line and a US$40-million mezzanine term loan, according to PitchBook. Silicon Valley Bank didn’t comment on the investment, and Clearco declined to comment on its fundraising.

In addition to its fundraising, Clearco plans to cut costs by reducing its office footprint in Toronto, where its headquarters is located. It intends to sublet the last remaining floor of its office space at 33 Yonge St., after subletting two of the three floors last year, said a person with direct knowledge of its plans. Two former employees said the company has already started to rent out part of its remaining office space. Clearco called the claims “not accurate at all” and said it occupies a full floor in the building.

As of April, an office space with the same address as Clearco’s was being marketed on LinkedIn to potential subtenants by the real estate-services firm Avison Young. Asked about the listing, Rosen-Wachs said, “We’re exploring all of our options but will maintain a strong physical office presence in Toronto regardless.”

Meanwhile, current and former employees said that near-constant waves of firings in recent months and a shrinking headcount have put staff on edge, leading some to question whether company leaders have been transparent about the scale of the cuts.

“Clearco has been very stealth and makes people sign intense NDAs [non-disclosure agreements] to get any severance, so there’s very little online ripple,” said one former employee, who quit last month. “Company culture used to be ‘radical candor,’ but there’s no transparency from management anymore.”

“Standard employment contracts, like ours, signed upon hiring, include non-disclosure and non-disparage agreements,” said Rosen-Wachs. “This is typical industry practice and is not connected to severance.”

At an all-staff meeting on July 6, co-founders Michele Romanow and Andrew D’Souza were asked about the volume of departures in recent weeks and whether it would continue, according to one current and one former employee who attended. Although D’Souza acknowledged the departures, he said they were due largely to attrition and performance management, adding that Clearco wouldn’t pursue mass layoffs.

Still, six current and former employees said staff cuts have continued on a regular basis since May, with little acknowledgement from company leaders prior to the town hall. Between June and July, for example, Clearco’s main Slack channel lost roughly 50 people, or close to 10 per cent of the company, one person said—suggesting that its headcount shrank even as Romanow said publicly in June that cutting costs was “the last thing I want to do, and don’t need to do right now.” But, Romanow said at the time, “I also need to be realistic about what the market will want.”

Rosen-Wachs said Clearco’s leadership has been transparent “both at the company and team levels.” He added that Romanow and D’Souza “have proactively communicated with the team surrounding the uncertainty of the macroeconomic environment for months and have been forthcoming about the fact that the world is rapidly changing.”

The lack of communication from the top has only exacerbated the frustration among some Clearco staff members. In some cases, as when Clearco laid off employees in Ireland just after announcing an expansion in the country, staff found out about the layoffs only after reading about it in the press or seeing social media posts from former colleagues, two former employees said.

Rosen-Wachs confirmed in May that the company had reduced headcount in its sales, engineering and recruitment teams, as well as a “single-digit” number of staff in its Ireland office. Meanwhile, the downsizing has prompted some employees to examine other options, recognizing that their jobs might be next to go.

“People will often say that job security was just never a thing that was there,” said a former employee, who took a job at a different company after observing the scale of the cuts. “If I hadn’t left the company when I did, I know that would have been me the following week.”