SoftBank-backed FinTech Kabbage has furloughed a “significant number” of its 500 US employees as it becomes the latest company to suffer from the global COVID-19 pandemic.
Staff were told about the decision via video conference due to the team working remotely because of the coronavirus, according to TechCrunch. The publication has seen a memo outlining the measures. The memo was sent to staff.
The company is also completely closing down its offices in Bangalore, India, and executive staff is reportedly taking a “considerable” pay cut in order for the company to survive the crisis.
Kabbage has made a name for itself through its solution that leverages machine learning to evaluate loan applications from SMEs. Rob Frohwein, co-founder and CEO of Kabbage, stated that these measures were necessary in order for the company’s growth not to have been in waste.
“We realise this is a shock to everyone. No business in the world could have prepared for what has transpired these past few weeks and everyone has been impacted,” Frohwein wrote in the memo seen by TechCrunch. “The economic fallout of this virus has rattled the small business community to which Kabbage is directly linked.
“It’s painful to say goodbye to our friends and colleagues in Bangalore and to furlough a number of US team members. While the duration of the furlough remains uncertain, please bear in mind that the full intention of furloughing is temporary. We simply have no clear idea of how long quarantining or its reverberations in the economy will last.”
The company’s measures underscores the extent of the crisis and the impact it could have on the FinTech communty as a whole.
Kabbage has gone from strength to strength since raising $200m from Credit Suisse in 2017. In the years since, it has acquired companies like Radius Intelligence and Orchard. It has also achieved a valuation of $1.2bn, having placed it firmly in the unicorn club.
However, as FinTech Global has previously reported, many FinTech unicorns could find their valuations slashed as the coronavirus keep on spreading.
Analysis made by Rosenblatt Securities, the agency brokerage, has warned that the industry could be affected by worsening market conditions that affect both demand and supply, hampered growth and see FinTech founders could see their exit options change dramatically.
That being said, it should be noted that some FinTech executives and stakeholders have maintained that their productivity has remained the same or even increased because of the virus as the can work from home and do not waste time with commuting to work.
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