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RenoRun cuts 43 per cent of staff as Canadian tech layoffs mount

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Another Canadian startup that raised significant venture capital during the pandemic tech boom has downsized as the sector’s problems worsen.

RenoRun Inc., a Montreal startup that is building an Instacart-like service delivering building materials to contractors, cut 43% of its staff, or 210 people, on Thursday. It is the second round of recent layoffs for the company after cutting 70 employees, or 12% of its staff at the time, in August and freezing expansion plans. RenoRun, which had more than 550 employees in July, now has 274. The latest cuts have been across the company, including three of its eight-person management team, CEO Eamonn O’Rourke said in a statement. interview.

“We are proud of our employees first, and having to do something like this is difficult for everyone,” he said. While Mr. O’Rourke expects RenoRun to more than double its revenue in 2022 – a consistent trend for the company – “the business environment in which we operate has fundamentally changed”.

Consumer confidence is falling and interest rates are rising in the face of rising inflation, so “people will inevitably stop spending on discretionary spending like renovations” which will hurt its customers and have a impact on RenoRun’s business. He said some clients who previously had 12 to 18 months of work booked have seen that drop to six to 12 months.

“The level of uncertainty in the macro and venture capital environment means we need to plan for the worst and cut expenses. To manage business risk, we will focus on serving our core client base. and will do so profitably.”

Layoffs have swept through the tech sector as companies have had to shift from a “growth at all costs” mentality to laying out a path to profitability in the face of an expected recession. According to Layoffs.fyi, which tracks job losses at startups, more than 700 companies, including Shopify, Hootsuite and Clearco, laid off more than 94,000 people in 2022.

Mr O’Rourke founded RenoRun in 2016 with his wife Joelle Chartrand and brother Devlin (who has since left) after the couple took a break in California the year before after running several construction companies together. When Mr. O’Rourke saw how Instacart’s on-demand grocery delivery service worked, he thought the model would be a hit with general contractors, delivering everything from screws to two-by-fours, and their avoiding going to the store.

RenoRun began operations in Montreal in 2017 with Mr. O’Rourke and his team walking the job sites offering free coffee and a sales pitch. Demand grew rapidly and RenoRun expanded to Toronto and the United States. He raised $25 million in venture capital in 2019 from Canadian and American investors.

RenoRun has grown into a vertically integrated e-commerce merchant, overseeing its logistics with branded vans and uniformed drivers and building technology to manage orders, route optimization and invoicing, with a warehouse in each market and powered by a range of providers.

Mr. O’Rourke believed that RenoRun had enormous potential to serve a US$500 billion home improvement market in North America. At the height of the tech bubble last year, it raised US$142 million under the leadership of Tiger Global Management (the deal wasn’t announced until last February). It was one of many deals in Canada by the New York-based hedge fund as it became one of the world’s most prolific tech investors, only to pull back when the sector took a turn.

Mr O’Rourke had hoped by 2022 that RenoRun would hit $100 million in revenue, grow from five cities – Toronto, Montreal, Boston, Philadelphia and Chicago – to 10 and continue to hire. But after entering Washington, he decided to stop expanding, cut staff and preserve cash.

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