Montreal e-commerce platform RenoRun, which specializes in the sale and delivery of building materials to contractors, is preparing for the worst and laying off 43% of its workforce.
Posted at 9:33 am
Management announced the news to its employees on Thursday morning. 210 of the company’s 500 employees lost their jobs. The decision affects 80 employees in Quebec.
The company had already laid off 12% of its workforce this summer, or 72 employees, in a cost-cutting effort that was obviously insufficient.
All departments are affected: operations, sales, marketing, technology, etc.
RenoRun was on a growth spurt and had closed a $142 million funding round last February. The workforce had grown from 135 employees in January last year to more than 500 at the beginning of the year.
“We have more than doubled our sales every year for the last five years. However, since the beginning of this year, the business environment in which we operate has fundamentally changed,” founder and CEO Eamonn O’Rourke said in an interview.
“More specifically, the level of uncertainty at the macroeconomic level and in the venture capital sector means that we have to prepare for the worst and therefore reduce our expenses,” he specifies.
Eamonn O’Rourke adds that RenoRun tries to maximize what the funds raised in the latest funding round achieve. He wants to position the company for the “inevitable recovery” that will ultimately come once the uncertainty surrounding consumer spending dissipates.
Anticipating a possible recession, Eamonn O’Rourke estimates that the storm could last 12-24 months and argues that RenoRun must reach profitability sooner than expected. “In today’s environment, growth is not as important as profitability,” says the company’s CEO and co-founder.
If it wants to convince investors to participate in a new round of financing, RenoRun will have to show that there is still enough demand for the services it offers. This implies that the company will again have to generate growth.
Present in six markets (Montreal, Toronto, Boston, Chicago, Philadelphia and Washington), RenoRun was founded five years ago. This year other markets were to be developed. A stock listing was even on the cards. These projects are now frozen.
The layoffs at RenoRun come on top of similar announcements made this year by several other tech companies across the country. The Ottawa company Shopify, for example, announced the layoff of 10% of its workforce this summer. Whealthsimple, Clearco and other companies have also recently made layoffs.
The economic uncertainty is fueled, in particular, by high inflation and rising interest rates, which contributes to raising fears about the financing of certain companies, especially in the technology sector. These companies are sensitive to increases in interest rates, among other things, because the higher the rates, the less value investors place on the future cash flows of these companies.
Referring to confidentiality, Eamonn O’Rourke did not want to reveal the company’s turnover.
RenoRun’s mission is to make life easier for construction contractors by delivering materials on demand.
The company claims it can deliver same day and works with manufacturers and distributors to supply customers with lumber, drywall, insulation, hardware and more.
The funding round completed in February was led by New York-based investment firm Tiger Global Management with participation from, among others, Investissement Québec, the BDC’s Women in Technology Fund, Desjardins Capital, Nicola Wealth and Export Development. Canada.
Existing RenoRun investors such as Inovia Capital and Silicon Valley Bank also participated in this financing. Sonder executives and the founders of Goodfood Market acted as strategic investors in the deal.
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