Banking-as-a-Service (BaaS) startup Synctera has undergone an organizational restructuring that resulted in job cuts, the company confirmed to TechCrunch.
Synctera did not disclose the number of employees affected, but a report in Fintech Business Weekly estimates the number to be around 17, or about 15% of the company. Doing the math, the company had about 113 employees before the layoffs and about 96 today.
Synctera has built a platform designed to connect fintech companies with sponsoring banks. The company recently announced an $18.6 million extension round to its $15 million Series A announced in March 2023. At the time, the company also announced the hiring of Lee Gross as its new chief revenue officer and clients BTG Pactual and Flutterwave.
Investors include NAventures, the corporate venture arm of the National Bank of Canada. Lightspeed Venture Partners; Fin Capital; Banco Popular. and Mana Ventures.
When asked about the layoffs, a company spokesperson wrote in an email: “ThinkTerra is restructuring the company and reducing its workforce as a result and is committed to supporting those affected. We will also focus on adding SaaS services.”
It's not the only VC-backed BaaS company to recently resort to layoffs to preserve cash. Finance Prime cut its 100-person staff by half in February, a year after announcing a $40 million Series C raise. And last October, Andreessen Horowitz-backed Synapse confirmed it had laid off 86 people, about 40% of the company. Figure Technologies, which includes Figure Pay, laid off 90 of his employees, about 20% of its workforce, last July.
Meanwhile, Piermont Bank has terminated its relationship with the start-up unit, FinTech Business Weekly reported.
BaaS refers to different types of business models, such as providing bank-like services to other players in the industry. or provide charter and banking services but not underwriting. Alternatively, you can also provide a banking component. This is not a bank, but more like a fintech that provides bank-like services without a charter.
BaaS players face challenges, particularly a regulatory crackdown in 2023. For example, companies offering BaaS to fintech partners accounted for more than 13% of severe enforcement actions by federal banking regulators last year, according to S&P Global Market Intelligence. Unfortunately, startups navigating these challenges may have to resort to further layoffs to catch up.
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