Loop, the auto insurer co-founded by Harlem Capital co-founder John Henry, has laid off employees as it struggles to raise capital.
Henry posted on Instagram an email that co-founder Carrie Nadeau sent to affected staff on June 16. Nadeau also posted the letter on LinkedIn. The letter said it was a “last resort” for the company after failing to raise additional funding after 20 months of trying. “It was our last chance, but at the last moment investors pulled out and we were short on cash,” Nadeau wrote.
The email further said the company decided to make job cuts to weather its financial difficulties. It's unclear how many people were affected, but according to a LinkedIn post from a former employee, the cuts affected insurance agents, as well as staff in customer care, data analytics, marketing, software engineering and product.
Henry did not immediately respond to our request for comment.
According to his LinkedIn profile, Henry co-founded Loop with Nadeau in 2020, shortly after leaving his role as venture partner at his firm, Harlem Capital. As TechCrunch previously reported, Loop aimed to be an alternative model for pricing insurance that was less reliant on structurally biased metrics like credit scores and education used in the traditional model.
The company emerged from stealth mode in 2021, raising a $3.25 million seed round led by Freestyle VC, with participation from Backstage Capital and Uprising Ventures. Loop then raised $21 million in a Series A led by Foundry Group and 01A (the fund of former Twitter CEO Dick Costolo and COO Adam Bain), the company said. The company raised an $8 million extension round in 2023, according to PitchBook.
Loop's fundraising troubles aren't unique to black-founded companies. TechCrunch reported that black founders raised less than 1% of all venture capital funding last year. That number continues to decline as commitments to back more black founders have faded in recent years after the killing of George Floyd. 2024 will remain a tough year for fundraising across the board. Crunchbase reports that 2024 is the year with the lowest funding rate since 2018, excluding certain verticals like AI.
In an Instagram post, Henry wrote that the situation was “unexpected” but that the company plans to operate through it. Other Black founders rushed to chime in on Instagram, expressing their support for Loop.
“Times are tough out here right now,” wrote Melissa Butler, founder of The Lip Bar. “Thank you for sharing your journey with us.”