Bookkeeping and payroll FinTech startup ScaleFactor shuts down operations after raising over $100m in just over a year.
In a town hall meeting this week, it told its 100 employees that half of them would be laid off with immediate effect and that the rest would gradually have to leave until ScaleFactor permanently closed shop in August, Forbes reported.
Speaking with Forbes, CEO and founder Kurt Rathmann said that the company had been forced to shut down as Covid-19 had all but decimated the demand for its software.
ScaleFactor was seemingly unable to convince SMEs that its technology could prove essential to save their own businesses. “Business owners went into fight or flight mode,” Rathmann told Forbes. “You don’t necessarily need all the planning tools, high end gadgets. You just get back to the simple ‘pen and paper.’”
The tech company first raised $10m in a Series A round in July 2018. The round was then quickly followed by a $30m Series B round in January 2019 and a $60m Series C round in August 2019. Its investors included Coatue, Canaan Partners, Bessemer Venture Partners, Broadhaven Ventures, Citi Ventures, Next Coast Ventures, Flyover Capital, Firebrand Ventures.
ScaleFactor has said that it will redistribute portions of its capital back to its investors, but didn’t say how much.
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