Credit card startup Brex laid off 62 employees as the company restructures over the impact of the coronavirus pandemic, co-founders Pedro Franceschi and Henrique Dubugras announced in a blog post Friday.
The layoffs make up about 17% of the Silicon Valley-based fintech’s total workforce, according to a Pitchbook estimate, cited by Business Insider. Brex, which is valued at $3 billion, provides credit cards and banking services for startups.
“As the extraordinary events of the last few months unfolded, it became increasingly clear that our plans for 2020 would have to be different,” Franceschi and Dubugras said. “Today we’re restructuring the company to better align our priorities with this new reality, while simultaneously accelerating our product vision.”
Brex’s job cuts follow the company’s recent $150 million fund raise, which it announced last month.
Dubugras called the recent raise an offensive move, rather than a defensive one.
“I’m glad this round came together, but if it hadn’t, we would’ve been fine,” he told TechCrunch last month. “The capital is so we can play offensive while everyone else plays defensive.”
In Friday’s blog post, the co-founders said the company will revisit investments that no longer make sense in light of the pandemic.
“Three months in, it’s clear that the impact of COVID-19 won’t be short-lived. We know that the pace of growth won’t be what we expected for the foreseeable future,” they said. “This unique situation created the space for us to think about the future of Brex, and how we could use this time to accelerate our mission — to reimagine financial systems so every growing company can realize their full potential.”
Startups, which make up Brex’s core customer base, have been struggling amid the pandemic, affecting Brex’s bottom line.
The company has had to cut some customer credit limits to mitigate some of the exposure risk, according to The Information.
“Building Brex has been an incredible journey so far, and we’re still far from realizing our full potential,” the co-founders wrote in the blog post. “But all the progress we have made is because of the talent, energy and ambition each one of you brought here.”
Terminated employees will receive eight weeks’ severance, Brex said. Health care benefits will remain active through the end of June.
“We will then pay for COBRA health insurance through the end of 2020 to ensure continued access to healthcare, especially during a global pandemic,” the company said.
Former staff can also keep their computers or any other equipment provided to help aid with their job search, Brex said.
Brex, which is backed by PayPal co-founders Max Levchin and Peter Thiel, launched a business cash management product, Brex Cash, last fall. The product, which is meant to replace business bank accounts, is integrated with a credit card and allows businesses to pay invoices and bill their customers in one system.