Expect more layoffs as the Fintech Winter draws in
Aside from the chaos seen as FTX scrambles for survival, more fintechs are announcing significant job cuts.
The weather in the City of London is, to quote the UK’s Meteorological Office, “exceptionally mild” with the country’s capital set for a record-breaking 18 degrees celsius over the weekend.
The capital’s mildness in its weather contrasts starkly with a deep chill setting for fintechs in both Europe and North America where a second round of mass layoffs appears to be establishing itself.
This week, however, there have been some notable examples in the European and US fintech space too.
Jeppe Rindom, the CEO and co-founder of Pleo told employees the company was shifting its aggressive growth strategy over the past few years - that saw it launch in 12 new countries in as many months.
It is no longer pursuing a “growth first mandate”, according to a blog post and instead would be operating “growth through focus and efficiency”.
“We’re not immune from the market downturn and we have to focus on our route to profitability. We’ve had to make some tough decisions about our business. The playbook is to focus on our strengths – and that has meant downsizing in some markets and saying goodbye to good colleagues.”
This week’s bad news - which it is is always worth remembering is not simply a trend but a personal catastrophe for hundreds if not thousands of people concerned about their financial situation - follows another week of similar stories.
Fintech’s first big round of cuts of course came earlier in the year in May and June amid rapidly changing sentiment in the wider macro environment, soaring inflation and no quick end to the Russian invasion of Ukraine.
While there are reasons to be optimistic, given some signs inflation is slowing in the US and Ukraine's gains in Kherson, it is unlikely sentiment is going to shift quickly back to a growth-above-profitability mindset any time soon.
Dozens of large fintechs are still growing rapidly and continuing to hire but the direction of travel points to more bad news in the coming months. Wrap up warm for Fintech Winter.