Wealthsimple is laying off 13 per cent of its workforce as the financial services company joins the slew of global technology businesses facing “market volatility.”
In a letter sent to staff of the Toronto-based business on Wednesday, chief executive Michael Katchen said 159 of the 1,262 people who work for Wealthsimple will depart the company through the move.
He positioned the cuts as part of the fallout from months of seeing the market soar and wealthsimple grow at an “unprecedented” rate amid the COVID-19 pandemic.
The company’s valuation hit $5 billion and it raised $750 million from a star-studded list of investors including rapper Drake and actors Ryan Reynolds and Michael J. Fox, as money poured into the tech sector during the health crisis.
“Of course volatility works both ways, and we’re seeing the other side of it now as the pandemic market conditions unwind,” Katchen wrote to workers.
“Many of our clients are living through a period of market uncertainty they’ve never experienced before.”
The changing conditions mean the company will now focus more heavily on core businesses, like investing and banking, and products he believes will power financial innovation, like those within the crypto industry.
Wealthsimple will reduce its investment in other areas like peer-to-peer payments, tax, and merchant services and restructuring teams dedicated to recruiting, marketing, client success and research, Katchen added.
“Today is going to be hard — there’s no getting around it,” he said, in his note. “But our mission has never been more important.”
Wealthsimple’s job cuts come as global technology companies are bracing for a market correction and possible recession as the exuberance around tech stocks is fading and some share prices have plummeted 50 per cent from their COVID-19 highs.
Netflix, Klarna, Cameo and Bolt are among those that have already conducted layoffs, though many others are freezing hiring.
Technology incubators including the DMZ in Toronto and Communitech in Waterloo, Ont. are advising startups to bolster their cash reserves, prepare for fewer investments from venture capitalists and focus on revenue-generating segments of their businesses.
Wealthsimple was founded in 2014 by Katchen and is primarily owned by Power Corp.