Fintech startup Property Partner cuts close to 30% of staff and blames 'growing theme of caution' in startup land
The restructure brings Property Partner's headcount down from 44 to 31, or a reduction of just over 29%. The startup says in a statement that the layoffs are "a proactive move to improve efficiency and streamline the company's cost base."
CEO and founder Dan Gandesha said in an emailed statement that there "across the global startup community there has been a growing theme of caution and more active management of costs, beginning late 2015."
Cash flooded into tech startups in the early part of 2015 but began to cool off towards the end of the year amid concerns about profitability and high valuations.
Tim McSweeney, a director at technology-focused merchant bank Restoration Partners, told BI in April of this year that investors have switched from looking for potential "unicorns" - fast-growing startups that could one day be worth $1 billion - to looking for cockroaches, businesses with "resiliency... to weather the storm."
Property Partner told BI that staff are being let go are mainly from support services roles - HR, customer services, and marketing.
Here's the full statement on the redundancies from CEO Dan Gandesha:
"It is always extremely difficult to lose talented and highly-skilled staff but across the global startup community there has been a growing theme of caution and more active management of costs, beginning late 2015.
"We are closing 13 job roles in support services to improve focus on our core business proposition. For example, we will shortly be launching a globally innovative 'bidding-engine' feature that takes us yet closer to our vision of a Global Stock Exchange for Residential Property.
"Our balance sheet remains strong, our team, Board and shareholders committed, and we are all as passionate and confident about the future as ever."
Property Partner lets people invest in UK residential property, buying a slice of a rental from as little as £50. Investors then get a cut of the rental income and benefit from any increase in value. Close to 8,000 people have invested over £34 million on the platform, buying up 234 properties.
The startup, which launched in early 2015, raised £15.9 million ($22.5 million) in equity and debt in March of this year. Backers include top London venture capital funds Index Ventures and Octopus Ventures. It is one of a number of property-focused tech businesses that have recently sprung up in the UK, dubbed PropTech.
Gandesha told BI that the redundancy decision was taken "before and irrespective of the [EU] referendum result." While that may be the case, cost cutting is probably even more prudent in the wake of the shock Brexit result. There are concerns in the UK's booming fintech sector that investment, already waning at the start of the year, could suffer even further.
The property sector, where Property Partner plays, has also taken a hit from the Brexit vote. Several commercial property funds with holdings in the billions have been forced to freeze withdrawals after being overwhelmed by demand from investors looking to withdraw cash.