Synapse Lays Off Over 50% of Staff, Moves Operations Due to COVID-19
Synapse, a fintech startup that had been dubbed the AWS of banking, has announced a restructuring of its workforce and operations. According to reports from June 13, the company has cut a significant portion of its workforce.
How Many People Lost Jobs at Synapse?
Besides the job cuts, the company will be overhauling its operations. Some of which will be moving from their former home in San Francisco to Texas. All these are allegedly in a bid to combat the effects of the COVID-19 outbreak.
These changes were confirmed in an email from their CEO Sankaet Pathak to customers this week. In the email, which was later made public, he confirmed the layoff of staff and the change in operations. These, he says, aim to not only strengthen the company but expand its customer base.
Pathak acknowledged that the decision was a difficult one to make. However, he believes that it was the best course of action for the business in the long run. In the end, he hopes that SynapseFI will emerge stronger and more competitive than ever.
Synapse previously had a workforce of around 120 people, and it is estimated that around 63 were laid off, though the company has not confirmed this. Following the move to Texas, the company plans to hire employees for customer-facing teams. The product and design teams, however, will remain in California.
Synapse Job Cuts Explained
While a number of companies around the globe have been affected by the COVID-19 outbreak, this is not the only issue that Synapse has faced. In recent times, they have been the subject of criticism from ex-employees for discrimination. Their CEO has also come under fire for his management style.
Just last year, the company was sued by three former female employees for discrimination and harassment. Besides being discriminated against on the basis of gender, pregnancy, and age, the women allege that the CEO verbally abused them in private and constantly undermined female employees. A spokesperson for Synapse claimed that the lawsuit did not properly represent the company’s culture.
CEO Sankaet Pathak has been the subject of consistent criticism over the last few years for his actions within the company. In the early days of Synapse’s existence, he was accused of sharing inappropriate messages on the company’s Slack channel. He claimed it was a joke that was only intended for friends.
Last year, around ten employees left the company amid allegations of his authoritarian leadership style. Several employees reported him terminating their employment in fits of rage only to reverse his decision shortly after. It was alleged that such an incident happened again as recently as February 2020.
The company, with all its alleged leadership flaws, has been successful in raising funding. In June 2019, they raised $33 million in Series B funding for new product development and expansion. This funding round was led by Andreessen Horowitz, along with backing from Trinity Ventures and Core Innovation Capital.
This came just months after the company raised $17 million in Series A funding in September 2018. Upon completing their Series B funding, their total funds raised was $50 million. Hopefully, as the business restructures, this funding will prove helpful.
Business Changes in Light of COVID-19
The COVID-19 outbreak has led to significant changes in all facets of the business world, and has triggered one of the biggest stock market crashes in years. The NYSE trading floor, for instance, was forced to close for two months, a feat that rarely occurs. However, the floor has since re-opened, though with new safety measures put in place.
Fintech firms have been uniquely affected, however, as they have lost out on billions of dollars in funding. At the same time, the loss of funding cannot be entirely blamed on COVID-19. Recent reports suggest that factors such as a lack of equity management are also at play.
Do you think SynapseFI can survive the effects of COVID-19? Will fintech as a whole be able to bounce back? Let us know your thoughts below.