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Colombian Startups Addi, Hunty Confirm Layoffs as Merqueo Exits Mexico

As anticipated by Bloomberg Línea, the slew of redundancies in startups has gone from a threat to reality in Colombia

Latin America saw 423 venture capital deals totaling $4.86 billion year-to-May, a 22% drop in the value of deals in year-on-year terms, but a 9% increase in the number of deals, according to Transactional Track Record and Datasite.
June 14, 2022 | 02:01 pm

Bogotá — The specter of layoffs has gone from a fear among startups in Colombia to a reality, but one which few want to talk about, although some founders and executives in the country have broached the theme for the sake of clarity with their employees.

In line with the global trend, startups in Colombia have not been oblivious to the scarcity of capital and the pressures brought by the global economic recovery, and which has translated into concrete actions to take care of their finances.

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According to two former employees, fintech company Addi recently carried out “a mass layoff”, but when approached by Bloomberg Línea the company declined to confirm the exact number of redundancies.

And jobs platform Hunty made some 30 employees redundant in recent days, the latest of several cases of startups in Colombia that have had to adjust their structure to the current challenges, and which include

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Other startups in Latin America that have been forced to make layoffs include Brazilian firms Vtex, 2TM, QuintoAndar, Loft, Facily and Creditas, Mexico’s Bitso and Argentina’s Buenbit.

Hunty made the layoffs following the execution of cost-cutting measures in its marketing and sales departments, and salary reductions for its founders, in a bid to minimize the number of layoffs while adapting to the reality of the current market and to continue growing.

“Every person who left Hunty was able to use our program to help them get jobs without charging them,” company founder Sebastián Caro told Bloomberg Línea. “Our commitment to people is real, obviously these issues are very difficult to handle because there is no easy decision, no good decision, in the end you think about what is best for the company”.

Caro explained that not only Hunty’s ex-employees are being helped in their job search, but also those who have been laid off from other startups in the country.

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Hunty’s layoffs took place on June 2, and which the company attributed to safeguarding itself at a time when it is close to its break-even point and in order to achieve a new round of funding, Caro said.

“Today we are facing a very interesting situation, in which we have to adapt very quickly, because we came from a world in which money was practically free, you could go out and raise capital and priority was given to growth rather than efficiency. And today, when you analyze what happened in 2000 with the dot-com bubble, or what happened in 2008, those companies that ended up really winning the game were the ones that adapted faster and sought to grow consciously and profitably,” he added.

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And although he says that investment rounds currently take up to 2.5 times longer to complete than in the past, Caro is confident that “there will always be capital for good companies”.

Last year the company closed a $6 million seed investment round to allow it to continue fighting unemployment in Latin America through its platform. During its first year of operation, the company, formerly known as Worki, helped more than 2,000 people find jobs.

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With the investment obtained last year, the company also sought to consolidate its position in Colombia and expand its operations in Mexico.

Addi sheds staff

In the case of Addi, the layoffs come after the company raised $200 million in debt and equity last year, bringing its valuation to over $700 million.

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Addi launched operations in Brazil in February 2021 and this year planned to enter Mexico, but that plan has not materialized.

Co-founded in late 2018 by Colombians Santiago Suárez, Daniel Vallejo and Elmer Ortega, Addi reached more than 500,000 customers and 1,000 retailers using its payment processing system by the end of 2021.

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“Given the global economic situation, at Addi we implemented a mutually agreed retirement program with our outgoing colleagues, which we did in accordance with our values and principles,” the company’s CEO Santiago Suárez told Bloomberg Línea.

This program “included an important component of economic and professional support to our outgoing colleagues, to whom we are extremely grateful and wish them the best of luck in their next professional challenges,” he said.

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According to the company, the layoffs were due to a refocusing of Addi’s strategic priorities.

Suárez said that the company has the strength of cash and equity, as well as the support of its investors.

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“We continue to work to consolidate our position as the leading BNPL company in Latin America,” he said.

Merqueo bids farewell to Mexico

As reported by Bloomberg Línea, Colombian delivery company Merqueo closed its operations in Mexico earlier this month, amid the complex landscape for startups in Latin America.

Merqueo’s communications offices in Colombia and Mexico confirmed that the app was shut down on June 8, but said they had no further information regarding the reasons for the closedown.

Merqueo’s main dark store in Mexico had an area of 1,200 square meters and was located in the Coltongo area of the Mexican capital, very close to the industrial plants of other companies such as Bimbo and FEMSA.

The company had 100 employees in Mexico, Merqueo said in April.

Following the departure of Merqueo from the country, Ricardo Weder, founder and CEO of Mexican virtual supermarket Jüsto, said he regretted what had happened to his competitor in the country and invited Merqueo’s former employees to apply for vacancies at his company.

Venture Capital activity has seen a slowdown in terms of the value of operations so far this year, although the number of operations has increased.

Latin America saw 423 venture capital deals totaling $4.86 billion year-to-May, a 22% drop in the value of deals in year-on-year terms, but a 9% increase in the number of deals, according to Transactional Track Record and Datasite.

Marcela Chacón Sierra, institutional spokesperson for TTR, told Bloomberg Línea that “the current environment of uncertainty has generated that small companies are the target of investors with great financial muscle that can take advantage of this situation to close deals with a lower amount than could be reflected in previous periods”.

Translated from the Spanish by Adam Critchley