Greenlight Financial, an Atlanta-based company that focuses on debit cards and other products for children, teens and families, has cut one-fifth of its workforce.
The company, which has reportedly raised more than a half-billion dollars in venture capital since its 2014 founding, laid off 104 employees, blaming the “macroeconomic environment.”
The decision to slash its workforce “across all locations” was compelled by economics, according to a written statement from a company spokesperson. “We recently made the difficult decision to better align our ongoing operating expenses with the current environment.”
The job cuts, first reported by Techcrunch, an online source of tech sector news, were carried out last week.
“Impacted employees were first informed via email in order to reach everyone as swiftly as possible,” the spokesperson said. “They were then contacted individually by phone.” The company said that laid-off employees will be given severance pay, medical coverage and career transition support, but did not say how long those benefits will last.
Greenlight did not indicate there are plans for any change in its basic business.
The company sells a debit card for children, as well as applications for banking and financial education. Greenlight’s debit card is issued by New York-based Community Federal Savings Bank. In December, the company rolled out extra safety features for family financial planning
That product, a $14.98-a-month subscription, enabled sharing of locations so family members could see where others were and other features like emergency alerts.
“The company remains committed to its mission to help parents raise financially-smart kids,” said the company statement. “Moving into 2023, Greenlight will be focused on continuing to serve its growing customer base and finding new, impactful ways to improve financial literacy for families.”
The company’s chief executive officer, Tim Sheehan, is a co-founder of the company.
According to Techcrunch, Greenlight has raised about $556.5 million, but prospects for a good return to those investors have darkened in recent months.
“The macroeconomic environment has impacted virtually all businesses, including Greenlight,” the Greenlight statement said.
Talk of an impending recession has been in the air for months as the Federal Reserve has ratcheted interest rates higher in an effort to slow the economy and tame inflation. The shifts in spending as consumers shift away from their pandemic habits has also rattled some sectors.
But the impact thus far has been uneven. Many sectors continue to grow and overall unemployment remains near historic lows.
The shifts move spending away from goods and back toward in-person services that had been neglected. Higher interest rates mean that investors need higher profits to justify their bets on new companies.
Under that pressure, many companies — like Greenlight — cut costs and many consumers veer away from big purchases.
The housing market tanked in late fall, with banks and other lenders bracing for a downturn. Meanwhile, many tech companies have cut back, including Amazon, Twitter and Meta, Facebook’s parent company.
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