The fast-growing startup has laid off 40 of its employees despite its valuation rising to over $200 million.
InDebted calls itself a “new type of debt collection agency” that focuses on customer service, allowing people to use a digital self-service portal to settle their debts.
The company was founded by CEO Josh Foreman as a way to improve the debt collection process for all involved by moving away from the “shortcomings” of traditional debt collection agencies.
The company quickly took off and skyrocketed in fintech, even doubling its valuation in a recent $22.5 million funding round. AFR reported.
However, despite its success, the startup still made the decision to lay off 40 employees shortly before the end of the financial year.
Most of the layoffs were in sales and marketing.
Judging by the company’s website, it employs more than 280 people, so the loss of 40 employees is not significant.
Mr. Foreman said the decision was “incredibly difficult” but the changing economic environment meant it needed to be made.
“While we recently closed a $22.5 million funding round, like many other high-growth startups on the same path as us, we are not immune to the need to respond to a changing economic environment that is likely to , will continue for the foreseeable future. he told news.com.au.
“This included the incredibly difficult decision to say goodbye to our 40 team members as we refocused our strategy to prioritize efficiency and sustainability over rapid scaling and ‘grow at any cost’.
InDebted is consistently renowned for its modern approach to work, and has even been named the AFR BOSS Best Place to Work in 2022.
The company offers a four-day work week, a work-from-anywhere policy, unlimited vacation time, and a quarterly office stipend.
Mr. Foreman said the fundamental values and “culture of transparency and compassion” remain the same, saying his employees are sympathetic to the recent layoffs.
“We are leading this process with empathy, placing the well-being and support of employees at the center of our decision-making and our communication,” he said.
“Since then, our team has rallied and is incredibly understanding of and adapting to the recent changes.”
In addition to severance pay, employees leaving the company were also offered: access to transition support services, help finding new job opportunities, access to the InDebted employee assistance program for the next six months, and accelerated access to capital.
All team members were also allowed to keep their laptops and all company-provided home office equipment, and U.S. employees were given access to their medical benefits for six months.
“We continue to support affected employees during this transition, and a number of affected employees shared their appreciation and noted that this process was handled with empathy and respect,” Foreman said.
The move comes just days after the venture capital firm released a sobering message about the state of Australia’s startup industry as tough market conditions bite.
Square Peg Capital sent out a scathing email to investors last week. admitting that they regret having invested so much money in a new business because the economic situation in Australia continues to deteriorate.
“Looking back, our pace of investment should have been slower than it was,” Square Peg said in the letter. Sydney Morning Herald.
“We had enough information to close a number of positions and return you significant capital, but it was cognitive dissonance that prevented us from slowing down the pace of new and subsequent investments.”
The company has warned that more startups will fall in the next few years.
“The failure rate in our portfolio has been remarkably low for a number of years and this is not sustainable,” the email continued.
“We will assess each situation with an impartial, but also high level of transparency and empathy towards the founders.”
Dozens of companies have failed in the past few months as supply chain problems, runaway inflation and cost cuts amid Australia’s cost-of-living crisis have driven many businesses to an early grave.
Several well-known startups have also been hit by the economic crisis in recent weeks.
Square Peg warned investors that they should not expect the same high return on their investment as in previous years.
“We have slowed down the pace of investment in both new and existing portfolio companies,” the email said.
“We believe this is the right decision given the high level of uncertainty right now.”
Originally published as Startup fires 40 employees at $200 million valuation