Saskatoon SaaS company Vendasta has reduced its headcount as it joins the growing list of Canadian tech companies that were hit by the economic downturn.
“Now, valuations are based on companies growing profitably, and it is in everyone’s best interests that we adapt to this new reality.”
– Brendan King, Vendasta CEO
CTV News reported that the layoffs affected less than five percent of Vendasta’s employees. This would amount to around 35 employees of the company’s workforce of almost 700 that spans across Saskatoon, Vancouver, Toronto, India, and the United States.
Vendasta refused to disclose the number of people it laid off to BetaKit, with director of brand and experience Nykea Marie Behiel noting that: “The structural changes this week are a result of our ongoing process to ensure both our team and our investment match our strategy.”
She added that Vendasta has “now centralized functions that were duplicated across our organization, or were too far from working directly with customers. Our current structure will allow us to better support our customers, enhance our platform and improve our unit economics.”
Vendasta CEO Brendan King claimed in an open letter to employees that many of the current cuts are related to culture fit. In King’s statement, shared by the company with BetaKit, he wrote that the layoffs amounted to higher turnover than the average 30 employees that he said Vendasta sees leave the company each quarter.
The company’s chief operating officer Jacqueline Cook told CTV News that the workforce reduction is partly due to the market normalizing after COVID-19 became the company’s catalyst for growth.
Vendasta, a 14-year old tech firm, offers cloud-based commerce software for companies that provide digital products and services to small and medium-sized businesses. Its platform connects over 50,000 channel partners to over five million companies, helping business owners find and buy software.
The staff cuts come after a strong couple of years of growth for Vendasta, with the startup hiring close to 300 employees since COVID-19 accelerated its business.
King wrote in his letter that “this situation is really a continuation of COVID.” He added that Vendasta has faced new challenges without any guidance during the pandemic.
“We need to be proactive,” he wrote. “We want to act now with intention vs acting later with regret. Today, what we are seeing is that rising inflation and interest rates are changing the way that companies are valued. From 2018, until the start of this year valuations were based almost exclusively on growth and capital was cheap so it made a ton of sense to raise money and invest. That is what we did. Now, valuations are based on companies growing profitably, and it is in everyone’s best interests that we adapt to this new reality.”
Earlier this year, Vendasta bought advertising tech company MatchCraft in its second acquisition deal in less than three months, following Vendasta’s purchase of CalendarHero (formerly Zoom.ai) in October.
Though the launch of its new head office contrasts with its downsizing, King wrote in his statement that these changes in Vendasta’s growth strategy are about increasing efficiency and growing profitably, as opposed to “growth at all costs.” He added that the company intends to position itself to “take advantage of current market opportunities.”
Vendasta raised $119.5 million last year, turning to the private market after struggling to sell its public offering amid the onset of the public market tech cooldown. The $119 million round marked the largest information and communications technology venture capital round in Canadian Prairie history at the time.
Some of Vendasta’s other backers include New York’s Lugard Road Capital, Nicola Wealth, the Canadian Business Growth Fund (CBGF), Comporium Inc, Saskworks Venture Fund, Vanedge Capital LP, and BDC Capital’s IT Venture Fund.
Most recently, Vendasta was named in this year’s list of Best Workplaces in Technology. Despite the staff cuts, Vendasta appears to still be hiring for certain roles as it has live job postings for roles in Saskatoon and Tamilnadu, India.
As the turbulent conditions of the public and private markets continue, Vendasta joins a growing number of companies that have implemented layoffs following rapid expansion during the pandemic.
Other Canadian tech companies that have made cuts in its number of employees in recent weeks include AlayaCare, Hootsuite, Dooly, Article, Mejuri, Uberflip, RenoRun, Shopify, Wealthsimple, Clearco, Unbounce, Coinsquare, Introhive, Ritual, and Bonsai.
Featured image from Vendasta
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