Wealthsimple has told employees that the company plans to pause hiring, The Logic has learned. It’s the latest tech company to tighten its belt in this uncertain economy.
Advance notice: The hiring freeze comes just weeks after CEO Michael Katchen told The Logic his company needed to be disciplined in recruiting and said the road ahead could be difficult for many startups. The Toronto-based fintech informed employees about the freeze last week, spokesperson Juanita Leon said.
Wealthsimple has told employees that the company plans to pause hiring, The Logic has learned. It’s the latest tech company to tighten its belt in this uncertain economy.
Advance notice: The hiring freeze comes just weeks after CEO Michael Katchen told The Logic his company needed to be disciplined in recruiting and said the road ahead could be difficult for many startups. The Toronto-based fintech informed employees about the freeze last week, spokesperson Juanita Leon said.
Talking Point
Wealthsimple told employees last week that it intends to pause hiring, the latest tech company to pursue similar cost-saving measures.
“We have made the decision to be conservative now, so we can continue being aggressive in the future,” Leon told The Logic in an email. Wealthsimple doesn’t know how long the freeze will last, Leon added, although the company will continue to hire for “certain mission-critical roles.”
Plenty of runway: Wealthsimple is well capitalized, Katchen told The Logic in last month’s interview. The company raised $750 million in 2021 from investors such as Greylock and Meritech, consisting of a $250-million primary offering and $500 million in secondary funding. Still, he didn’t rule out the possibility of layoffs, saying the downturn could lead to opportunities for companies that can endure it.
The company has seen its paper value decline amid a stock-market rout that has hit fintech companies especially hard. In May, Power Corporation of Canada, a major Wealthsimple shareholder, wrote down the value of its investment in the company by $400 million, a 19 per cent cut. Since March 31, the end of the period covered by Power’s disclosure, stocks have fallen even further. The ARK Fintech Innovation ETF, which tracks a group of publicly traded fintech companies, is down 55.2 per cent in 2022 as of Friday.
“We knew we would hit a market like this at some point, and I think we are going to have to be as thoughtful as everybody else is,” Katchen told The Logic.
The big picture: Canadian tech companies have been scrambling to cut costs as the funding market dries up and macroeconomic forces like inflation and geopolitical tensions increase fears of a recession. Ultra-fast delivery startup Ninja, for example, laid off much of its staff in May and is exploring a potential sale, The Logic reported last week. Meal-kit delivery company Goodfood laid off 70 staff members in April.
Other companies have been unable to make it through the turbulence. Wingocard, a fintech startup that helped provide teenagers with banking services, shut down last month. And FreshLocal, a Burnaby, B.C.-based company that operates a grocery delivery and software business, filed for bankruptcy in May.
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