Montréal-based building material delivery startup RenoRun has laid off around 70 members of its 600-person team, BetaKit has learned, joining a growing list of companies to cut costs and reduce their headcount amid challenging market conditions.
The layoffs impact approximately 12 percent of RenoRun’s employees across all of the company’s departments. RenoRun has also put a hold on its plans to expand into new cities in 2022.
RenoRun CEO Eamonn O’Rourke attributed the startup’s decision to lay off staff to a “perfect storm” of challenging economic factors.
In an interview with BetaKit, RenoRun co-founder and CEO Eamonn O’Rourke attributed the startup’s decision to lay off staff to a “perfect storm” of economic factors, pointing to the broader market downturn, “incredibly unpredictable” fundraising environment, and uncertainty surrounding consumer spending amid rising inflation and a prospective recession. “There’s just a level of uncertainty right across the board,” said O’Rourke.
“We want to make sure that we’re protecting the longevity of the company,” said O’Rourke. “So making a move like this means that we’ve got the ability to ride this out … Hopefully in the next 18 to 24 months, [it starts] to look a little bit like a normal environment again.”
At the same time, O’Rourke expressed regret regarding the move, emphasizing that people—from employees to customers—are “at the centre” of everything RenoRun does. “Taking a decision like this is not something that we do lightly,” he said.
Founded in 2016, RenoRun offers an e-commerce platform for building materials like lumber, drywall, hardware, doors, and paint. The company delivers these materials from local hardware stores and its own network of warehouses to residential construction job sites within two hours.
RenoRun describes itself as “the most efficient way of getting last-minute construction materials delivered to construction job sites.” To date, the startup has raised a total of over $207 million CAD from a list of backers that includes Tiger Global, Investissement Québec, BDC Capital, Real Ventures, ScaleUP Ventures, and Inovia Capital.
Following the close of its $181 million CAD Series B round earlier this year, O’Rourke said RenoRun was gearing up to launch “in a bunch” more cities across the United States (US) cities this year.
Now, given the shift in market conditions, RenoRun has “paused” its geographic expansion plans for the time being and “dismantled” its city launch and growth team in favour of focusing on the six existing cities that it serves: Montréal, Toronto, Boston, Chicago, Philadelphia, and Washington. “We won’t be launching [in] any new cities for the foreseeable future,” said O’Rourke.
“We’ve got six cities that are all growing incredibly healthy, but we don’t really know what’s going to happen to our industry … we still don’t fully understand what’s going to happen with consumer spending,” O’Rourke added.
According to O’Rourke, RenoRun has provided laid-off employees with a package that includes severance, early vesting options, and outplacement support services.
The industry RenoRun serves is heavily impacted by consumer demand for new residential construction and renovation projects. Consumer spending has slowed in recent months amid rising inflation, which has impacted the price of building materials, further impacting a sector that has already been forced to navigate materials shortages during the COVID-19 pandemic.
Difficult market conditions, fuelled by rising interest rates, inflation, and geopolitical tensions, have led many other high-growth tech firms across Canada and around the world to make similar staff reductions in 2022.
According to layoff tracking website Layoffs.fyi, 467 startups have cut a combined 64,518 employees so far this year.
“In a time like this, where things are so unpredictable, you’ve got to brace yourself for the worst,” said O’Rourke. “This may last two years. We want to make sure that we’ve got the ability to ride this thing out for at least 18 to 24 months.”
Feature image courtesy RenoRun.
Originally published on BetaKit : Original article