Spenmo lays off staff to extend cash runway

FIINANCIAL software startup Spenmo has initiated a fresh round of layoffs, according to an e-mail viewed by The Business Times, as part of a push to extend its cash runway past five years.

The startup offers spending management software-as-a-service (SaaS) solutions ranging from corporate cards to employee reimbursement. It recently raised a US$75.5 million Series B round in January 2022 led by Tiger Global, according to data platform VentureCap Insights.

The layoffs occurred on Nov 18, said the e-mail, with the macroeconomic environment and need for runway blamed for the layoffs. This was something that had been in the works for some time, said sources familiar with the matter, with team leads asked to select which of their team members to cut. A source put the number of people laid off at 30 per cent of Spenmo’s workforce, while another said it is about 70 out of the over 200 people employed.

This is not the first layoff Spenmo has initiated in 2022, according to sources familiar with the matter. Spenmo has carried out at least two layoffs, one in January and the other in June, with the credit team and sales team affected.

In the e-mail, Spenmo co-founder and chief executive officer Mohandass Kalaichelvan said that the company has to be focused on extending its runway as capital dries up. While the startup has enough for over three years, the imperative now is to extend it to over five years, urged by its board and advisers.

“We agree it makes sense to be fiscally responsible in this climate; no one really knows how long this recession will last,” said Kalaichelvan.

Cost cutting across the board has been initiated, from hiring freezes to renegotiating expenses such as rental and subscriptions.

“But these measures won’t bring our runaway to five-plus years, so I’ve made the hard decision to let go of some of our colleagues,” said Kalaichelvan.

Impacted employees will get undisclosed retrenchment benefits, accelerating the cliff period for employee share options, the equivalent of three months’ insurance premiums in the final payments, outplacement services and relocation allowance for work visa holders.

Resources now are being shifted into a smaller number of growth areas such as locally issued cards, deeper focus on accounts payable workflow for larger companies and investment into integration into bigger enterprise resource planning programmes.

The monetisation of the SaaS business will take longer, but will be much stickier and less churnable than the current fintech revenue.

“We have implemented big pricing changes, and recent cohorts are looking better than ever. The future is bright if we continue to execute relentlessly,” said Kalaichelvan.

Kalachelvan in response to queries, told The Business Times that Spenmo has laid off over 50 employees out of it over 290 employees in November. “I think this economic slump is going to be around for a minimum of three years,” he said when asked why having an over five year runway was important.